All companies seem to suffer from the same problem, the classic bell curve. In its youth, the growth curve is steep; in its maturity, the growth slows and then declines. For those companies that can spot the next new product or service, new growth emerges as company strategies shift. Apple has found new growth with the introduction of new and improved product lines; Netflix has attempted to grow with its move from DVD to streaming business. But for these and other companies, the question that shareholders and the stock market always ask is what will you do for me next?
In the world of media, Netflix's streaming business has grown to a size comparable to Comcast's cable subscription business. At almost 25 million customers paying $9 or more a month, Netflix is not constrained by franchise or continent. "The company is racing to add viewers to confront competition from Comcast Corp. (CMCSA)’s StreamPix and Verizon Communication Inc. (VZ)’s online venture with Coinstar Inc. (CSTR)’s Redbox. While Netflix may post a second-quarter profit, investors are focused on subscriber additions." And there it is, that same question, what are you going to do next, where are you getting more customers.
While I don't own a position in Netflix, I do see that they have an advantage to others; they can operate internationally. With content rights, they can go everywhere. Streaming also enables a second stream of advertising revenue. And a potential to push into e-commerce and other revenue programs. Eventually subscriber growth has to stall, it is inevitable; the challenge is finding other revenue models and other businesses that start new growth trends.
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