Without warning, last year Cartoon Network suspended the animated series “Star Wars: The Clone Wars”. But fans of the series will be pleasantly surprised when it debuts in America in the most popular streaming service in the world: Netflix. The Canadian and US subscribers of the internet TV system will also enjoy the exclusive premiere of the sixth and final season of the series “Lost Missions”.
The US company, which charges $8 a month for access to a number of television content by internet had a 553% increase in profits in 2013 compared to the previous year of $ 112.4 million. Meanwhile, the shares of the company have not stopped climbing. In the last 12 months they have grown by 146.26% and since its initial public offering in 2002, its value has been multiplied by 60.
This has come from the hand of an explosive growth in customers. In February it was announced that the firm surpassed HBO in number of subscribers: while traditional movie channel has a total of 29 million subscribers, the Internet reached 33.4 million, according to figures released by Time Warner. Finally, worldwide, it has 44 million subscribers.
Apparently everyone wants to be part of the Netflix phenomenon. What was the recipe that has led the company to success? From California, Kari Perez, senior communications manager for the company tells that success is due to the combination of content, technology, customization and ease of use in the user interface.
Series produced by the company known as “House of Cards” and “Orange is the New Black” have captured the public’s attention and helped customer loyalty. “2013 was accompanied by major deals like the one we sealed with Paramount and allowed us to add a great deal of content to our service” says Perez.
In addition, the company has signed agreements with Marvel and contracts with Miramax and DreamWorks original programming which from 2016 will be in the US, the sole transmission service that releases the traditional animated films of Walt Disney Studios. In addition to that, they have signed with Virgin Media and are part of the services offered with the Big Kahuna movies bundle.
Laura Martin, an analyst at Needham & Co., said the company is attractive to investors because the monthly payments consumers make are “predictable” and that reach a diverse group of people. “They are rolling into new markets, obtaining large numbers of subscribers in different countries. They are leading the way for new ways to watch TV” said Martin.
Ben Mogil, an analyst at Stifel Nicolaus & Co., said that unlike the music streaming services, which have been unprofitable to date, the VOD services focus exclusively on the content, so the difference is that they are providing a huge potential at a given fixed schedule with marginal costs. In addition to this, Mogil says that the company is attractive to customers due to its original programming and licensing of high quality content as well as because its price has remained low.
The company will raise the price of the subscription this year and argues that this is not a risk of losing customers because they provide a service that consumers like very much, so they will not suspend or cancel if the price goes up from $8 to $10.
Netflix expects to increase this year its subscriber base by 4 million, up to 48 million. Perez explains that after consolidation in the US and UK market, they now bet massively on Europe. “We plan later this year to embark on a substantial European expansion,” says Perez.
The analyst Laura Martin expects Netflix will expand into the French and German markets. Meanwhile, Ben Mogil added to those two the Italian one saying: “All three have similar characteristics to Canada and UK, which managed to succeed.”