Netflix, Inc. (NFLX): Is The Upside Potential Factored Into This Content King?

It is also important to note that the goal is not to make Netflix solely an original content provider, rather it’s to offer as much programming as possible to increase and keep subscribers.  As Ted Sarandos, Netflix’s chief content officer puts it Netflix “can be much broader.”  In effect it is to make Netflix resemble HBO a little more while still providing direct viewership on demand.

Competitors

Other streaming services are also jumping on the original content train. Amazon.com, Inc. (NASDAQ:AMZN) launched Amazon Studios and is planning on releasing up to 6 original comedy shows in 2013.  I believe Amazon is poised to be Netflix’s biggest competitor.  But a couple of things keep them in a clearly inferior position. First, Amazon’s video library is still dwarfed by the Netflix library.  Second, Amazon appears to be using its streaming service as a way to keep more customers within its total shopping environment.  Membership in its Amazon Prime provides shopping benefits, reduction in shipping costs and access to the streaming library.  The focus does not seem to be on challenging Netflix as the market leader.

Google Inc (NASDAQ:GOOG)’s YouTube is also increasing its original programming. The company announced 100 new original programming channels late last year.  But these appear to be in the manner of dramatic or comedic series that would compete with Netflix and more like informational channels and short one-time productions.

Another of Netflix’s competitors, Wal-Mart Stores, Inc. (NYSE:WMT) Vudu offers first run movies the same day they come out on DVD.  Vudu does not offer original programming and does not appear interested in doing so.

Conclusion

Netflix will likely continue to see subscriber growth and revenue growth in the coming year.  I expect the stock to trend higher along with these numbers as well. While there is obviously far less value in the stock then there was a week ago, the stock is still a good buy. With the entire Disney catalog coming online in 2016 and the focus on original programming Netflix looks well positioned not only for this year but for years to come.  I expect the company to show modest gains through the first few months of 2013 and see it reaching $180 per share by the time it releases first quarter earnings.

The article Is The Upside Potential Factored Into This Content King? originally appeared on Fool.com and is written by Maxwell Fisher.

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