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How does Netflix's future look?


Netflix is a household name across the globe. In living rooms from Australia to Japan, Germany to the UK and, of course, in America where the company is registered and run, people are watching features films, documentaries, dramas, comedies and more on the on- demand streaming service.

The business, which started life in 1997 as a DVD rental enterprise, whereby customers would select films online and have them sent through the post to their homes, has grown exponentially in its 18 years. Earlier this year, Netflix reported that it had a staggering 65.55 million subscribers and in July, the company published its impressive quarterly figures, which exceeded expectations. Shares jumped in value from $95 to $126, an all time high for Netflix.

Netflix Growth Chart

So what route has Netflix taken to enjoy such success and how has that growth in share value been achieved?

Perhaps the most significant factor influencing Netflix’s success is the simplicity of its model – subscribers pay one monthly fee to access on-demand content and there’s no advertising. In 2013, the company began to broadcast original content - its most popular show was political drama House of Cards. Since then, other Netflix original shows have soared in popularity, including Orange Is the New Black, Unbreakable Kimmy Schmidt, and Grace and Frankie.

Netflix began international expansion of its instant streaming service only four years ago – initially testing the waters in Canada. In July 2011, when the company announced that it would soon be entering the Latin American market, its forex share price immediately jumped 8%.. Europe was the next stop for Netflix, beginning in the UK and Ireland in early 2012. By autumn of that year, Netflix was available to the Norwegians, the Swedes, the Danes and the Finns.

Netflix Income Expenses chart

Netflix has enjoyed particular success in the UK, where audiences were faster to subscribe than either their Canadian counterparts, or their South American ones and in 2014, it was said that over three million UK households subscribed to Netflix.

In the US meanwhile, Netflix's viewing figures are so high that they beat those of some traditional TV networks like ABC, CBS and Fox. During 2016, Netflix has said it will complete its global expansion, ultimately reaching audiences in some 123 new countries. This will take the total number of territories or countries in which Netflix operates to 200. The early part of the year will see Netflix’s arrival in South Korea, Singapore, Hong Kong and Taiwan. These incredibly ambitious, but ultimately achievable expansion plans are expected to do much to improve both Netflix’s sales figures and its share value.

It has been predicted that Netflix shares’ earnings will rise by 49% in 2016, and that sales growth will hit 27% because of the new geographical territories and new forays into content creation. As Netflix’s star continues its ascent, the company can only be a good bet for wise investors who, like the company’s insatiable audiences, want even more Netflix in their lives.