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Citing "increased margin and subscriber assumptions," Pac Crest's Andy Hargreaves is raising his...

Citing "increased margin and subscriber assumptions," Pac Crest's Andy Hargreaves is raising his PT for Netflix (NFLX +3.9%) to $225 from $160. "Netflix's huge database of subscriber viewing habits should allow it to invest in original content where it will be most effective, while purchasing third-party content across an array of genres." Netflix execs have long talked up the company's use of data to make content decisions. Hargreaves sees Netflix having 36M U.S. streaming subs at the end of 2015, up from 27.2M at the end of 2012. (previous)
Comments (7)
  • DIgitalMediaView
    , contributor
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    The whole Big Data = Best Content rationale for NFLX's competitive superiority is based on careless assumptions and weak reasoning, as argued in the comments section here: http://bit.ly/105GnF8

     

    Meanwhile, yet another deep-pocketed new entrant, Intel, arrives on the scene to further bid up the cost of digital video content, adding to mounting pressure on NFLX razor-thin margins from tech giant competitors like AMZN, MSFT and others. http://bloom.bg/13twhUN
    26 Mar 2013, 11:17 AM Reply Like
  • Tvaddic
    , contributor
    Comments (250) | Send Message
     
    Intel is trying to do streaming cable, which isn't a threat to NFLX. And big data goes a long way, it may be the secret behind Google.
    26 Mar 2013, 03:21 PM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    Whatever INTC's model, they are seeking direct content deals with the big studios, which will bid up costs as they will seek to lock in distribution for their Internet-distributed format (as noted in the Bloomberg article cited). It's like saying Starz doesn't compete with NFLX because they're cable, and yet they were both bidding head to head on Disney and Sony rights.

     

    Data always helps but it's no panacea in making creative decisions. Experts like John Landgraf, GM of FX, say numbers-crunching would never have predicted the success of “The Sopranos,” “South Park,” and “Mad Men,” among others, including hits he green-lit like “Sons of Anarchy.” Landgraf: “Data can only tell you what people have liked before, not what they don’t know they are going to like in the future. A good high-end programmer’s job is to find the white spaces in our collective psyche that aren’t filled by an existing television show. [Those choices are made] in a black box that data can never penetrate.” (http://nyti.ms/15ikdkq)

     

    And if it Big Data really is such a big advantage, the big tech companies such as GOOG which you cite, along with AMZN, AAPL, MSFT, all in or heading into this space, will have the competitive edge on NFLX.
    26 Mar 2013, 04:29 PM Reply Like
  • Vick13
    , contributor
    Comments (129) | Send Message
     
    I am truly baffled how these penny ante analysts can make comments, assumptions like this:

     

    "The firm believes that most of its competitors won't push content acquisition costs higher," that is flat out incorrect,,,the studios are already having a field day collecting vast premiums for their content both new & old! Verizon, AMZN, HULU and others are all going to scramble for product. Exclusivity will demand a price. Also, original content is not getting any cheaper to produce, i.e. NFLX going over budget for House of Cards.

     

    "Pacific Crest still sees risk in its subscriber acquisition outlook." yet they raise their price target from $160 to $225??? Yes, NFLX has a valid head start on global streaming but price the stock relative to performance,,,vs valuating their customers near $500 per sub.

     

    NFLX is a great $75/shr company that exploded as a result of carving our a slim profit last Q & forcing a textbook short squeeze.
    To build in such a vast premium on the PE given a lot of headwinds due to competition, content costs, and the changing landscape that will redefine TV as we know it with companies that have much deeper pockets is careless. Also, one other major flaw w/ NFLX in my mind is that my family all use 1 acct #,,,this is costing them a lot of money.

     

    Right now NFLX is advertising agressively (although social networking keeps these costs down), they are desperate to keep the growth story alive and International expansion is saving their butt right now, otherwise they will get hammered.
    26 Mar 2013, 12:51 PM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    Spot on regarding content costs. Anyone close to TV/Film program producers can vouch for this. Good summary: "The future of the streaming industry will be one with multiple companies bidding against each other for exclusive content, leading to ever-rising licensing costs for the streaming services to bear." (http://bit.ly/11HPT6i) NFLX is outbidding not just MSFT and AMZN, but also the major broadcast networks, on originals. (http://bit.ly/WcG5gm)
    26 Mar 2013, 01:32 PM Reply Like
  • XRTrader
    , contributor
    Comments (609) | Send Message
     
    Yikes. The same analysts who told us to buy at $250 told us to sell at $80 and now want us to buy at $190. So reactionary. The stock is $30 above his price target, so he raises his price target to $225.
    26 Mar 2013, 09:35 PM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    "Netflix's huge database of subscriber viewing habits should allow it to invest in original content where it will be most effective"...

     

    Maybe they forgot to use the magic algorithm for Bad Samaritans. What is that, you say? NFLX new series binge-dumping on March 31. There is zero buzz on this series. Literally. Check Google Trends comparing House of Cards and Bad Samaritans, and BS flatlines, all zeros, regardless of how you adjust category parameters because there's "not enough search volume to show results" (http://bit.ly/1008tTk). Almost no advance publicity. Feels like Netflix is trying to bury this one so it doesn't detract from their Big Data = Best Content sales job.
    27 Mar 2013, 05:48 PM Reply Like
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