While it might be good to be king, any king worth his salt is always looking behind his back. Industry leaders might have a lot going for them but if you are a leader in a rapidly changing industry or an early leader in a still expanding industry, a little vigilance and a lot of advanced planning is required. These are precisely the factors at play in the strategic plan released by Netflix last July and which gives company analysts and streamed media content industry observers a rough idea as to where this Wall Street darling will be focusing on.
Netflix (NASDAQ:NFLX) has its work cut out for it. Sporting a P/E of over 200, this stock has performed so well that many critics are openly wondering whether the only the direction it has left to go is down. Well, considering the company’s planning to spend $7 billion dollars in 2016 to shore up its market dominance in the streamed content entertainment space, all bets are off regarding any idea of a Netflix stock crash.
While Netflix has spent quite a bit of money on leasing rights to content owned by Epix and Starz, the part of Netflix’ strategy that is worth paying a lot of extra attention to is its decidedly independent focus on purely independent content production. Depending on how solid its titles turn out to be (as well as how near term market trends pan out), this might not be the best way forward. Coming up with big content hits is speculative at best. Also, the great thing about providing a streamed outlet for content holding firms is Netflix gets to dodge the hefty production costs. Finally, given the increasing trend of cable cord cutting can favor purely Internet plays like Netflix as content producers shift from cable to the Web.