Background of Netflix, Inc
Netflix, Inc. is an American company specialising as a media-services provider as well as a production company which is headquartered in California.
Netflix, Inc. has a rich history that dates back to 1997 when it was founded by Reed Hastings and Marc Randolph.
The initial investment as start up funds for Netflix totaled to $2.5 million and the idea behind Netflix, Inc. was derived from the similar model that Amazon incorporated; to find a substantial category of portable items that could be sold over the internet.
When going to work with the idea, the founders found that VHS tapes were too fragile to ship and too expensive as well, when DVDs were tested next the concept of selling or renting DVDs by mail was considered.
Based on this, the founders rose to the challenge by taking on the $16 billion home video sales and rental industry. Through this, Netflix, Inc.’s first online DVD rental store was born and featured over 925 titles.
The concept of monthly subscriptions developed in 1999 and a single-rental model was dropped early in 2000, this was the foundation of Netflix, Inc.’s reputation that was built on a flat-fee unlimited rental model with the absence of due dates and several fees.
During 2000, there were already 300,000 subscribers to Netflix, Inc. and the service relied on the U.S Postal Service to deliver the DVDs to customers, resulting in substantial losses that led to Blockbuster offering to acquire Netflix, Inc. for $50 million.
The offer was declined and in early 2001, Netflix, Inc. saw substantial growth but as a result of the September 11 attacks, Netflix, Inc. was greatly impacted, and it resulted in having to lay off around 40 of their 120 employees.
As DVD players became more popularized during 2001, Netflix, Inc. saw a substantial increase in their subscription business by early 2002.
By 2003, Netflix, Inc. had earned around US$6.5 million profit on revenues totaling US$272 million and by 2005, there were approximately 35,000 different films available with Netflix, Inc. shipping out approximately 1 million DVDs on a daily basis.
With the cost reduction in data speeds along with bandwidth, customers could now download movies from the internet and Netflix, Inc., having considered the idea of offering movies online, acquired movie rights and designed both the box and service for it.
Due to the discovery and popularization of YouTube, Netflix, Inc. rejected their idea of having a hardware device and started developing a streaming concept instead, with the project reaching completion in 2007.
By February 2007, Netflix, Inc. had made delivery of its billionth DVD and regardless of this, there was some migration from the original business towards a video on demand service through the internet, allowing Netflix, Inc. to grow as DVD sales started plummeting.
The streaming content concept took some time, but as it started growing more popular, Netflix, Inc. could over 12,000 movies and shows by 2009.
By January 2013, more than two million United States customers were added to its customer base and this number grew exponentially, reaching 36.3 million subscribers by April 2013.
In 2019 the total staff compliment for Netflix, Inc. reported was approximately 6,700.
From 2013 to 2018, Netflix, Inc. subscriptions increased until it reached 137 million subscribers worldwide in October 2018, ranking it as the world’s biggest online subscription video service.
Netflix, Inc. primarily focuses on the provision of a streaming service which is subscription-based and offers the online streaming of an extensive library and portfolio consisting of both films and television programs.
Netflix, Inc. caters for a multitude of producers in addition to having produced its own in-house films and television programs that form part of its vast portfolio.
Netflix, Inc. oversees a high-value product portfolio of films and television programs that consist of a wide variety of genres which include, but is not limited to, documentaries, drama, horror, romance, comedy, historical, and more.
Today, Netflix, Inc. has over 182 million paid subscriptions around the globe, of which 69 million subscribers are based in the United States and more than 337,000 in South Africa alone.
Netflix, Inc Shares Growth Driver
By 2013, Netflix, Inc.’s revenues had reached $945 million followed by subscribers in over 40 countries by 2014.
In 2016, Netflix, Inc announced an expansion of the online subscription video service into 150 additional countries, covering all countries in which Netflix, Inc. may legally and logistically operate in.
The announcement to block VPNs came in January 2016 with a current subscription base of 74.8 million which was forecasted to increase by March of the same year.
By 2018, Netflix, Inc. crossed the $100 billion mark in market capitalization which resulted in it becoming the largest digital media and entertainment company worldwide.
In more recent years, Netflix, Inc. has seen several partnerships with creators and authors, along with the acquisition of ABQ Studios in late 2018 followed by a film deal that was signed with Paramount Pictures.
Netflix, Inc. became a member of Motion Picture Association of America in January 2019 followed by a deal with Dark Horse Entertainment in May 2019 and a multiyear content production agreement with Nickelodeon in November 2019.
With the ongoing Covid-19 pandemic on a global scale, Netflix, Inc.’s shares have been going up aggressively due to severe lockdown and quarantine measures to try and curb the spread of the virus.
Shares are forecasted to increase steadily throughout the duration of the pandemic and Netflix, Inc. is one of the very few companies set to benefit greatly from Covid-19.
Netflix, Inc Investor Tip
Netflix, Inc. trades its shares on the NASDAQ Stock Market (NASDAQ) under the stock symbol NFLX. Netflix, Inc. forms part of both the NASDAQ-100, the S&P 100, and the S&P 500 component.
There has been a share hike of 14% in 2025 due to the Covid-19 pandemic with the prices on shares currently weighing in at $375 per share with shares higher than 96% when compared to the beginning of 2018.
Netflix, Inc. revenues have grown by 72% from 2017 to 2019 along with a 234% increase in net income with the net income margin increasing from 4.7% to 9.3% from 2017 to 2019.
An analysis on the market performance for the first quarter of 2025 indicated a total revenue of US$5,767,691 thousand along with operating income of US$958,256 thousand and Net income of US$709,067 thousand.
Data from the analysis should be weighed against forecasted performance during this pandemic, but for now, prices on shares and in turn dividends remain unaffected, which provides shareholders with assurance that they will have a strong buy-in on NASDAQ.
Sector
Online media and streaming services
Industry
Entertainment and mass media
Sub industry
Online subscription video service
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FAQ
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Yes, you can.
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- Is Netflix, Inc a good share to buy?
Yes, it is. Despite the growing concerns surrounding Covid-19, Netflix, Inc. has been benefiting with shares growing at an astronomical rate in comparison to previous years. Shareholders can expect lucrative dividends and returns in the remaining quarters of 2025.
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- Can I buy Netflix, Inc shares in South Africa?