Shares of Netflix, Inc. (NASDAQ:NFLX) ended 2016 with gains of more than 8%. The stock rose more than 30% during the last six months of the year. The performance was impressive but many investors were expecting the stock to more than double like it did in 2015. A report from Barrons suggests that three main factors – including net neutrality and quality content without paying a fortune – could significantly impact Netflix this year.
Trump is Threat to Net Neutrality
Net neutrality is the concept that internet service providers should treat all data traffic equally and don’t discriminate or charge deferentially by content, user, website, platform, equipment, mode of communication, or application. The Federal Communications Commission Chairman Tom Wheeler in February 2015 passed the Open Internet Order, a set of regulations establishing the internet neutrality concept.
As we reported earlier, if Donald Trump’s administration rolls back net neutrality, it could have a number of consequences for Netflix. Trump named two advisors who could create problems for Netflix, Inc. (NASDAQ:NFLX) by rolling back net neutrality. The two men, Jeff Eisenach and Mark Jamison, are prominent opponents of net neutrality. They have previously spoken against net neutrality, serving as a lobbyist for the telecom industry. The end of net neutrality could make the streaming company more expensive for the average person in the US, the company’s biggest market.
Comcast and Netflix
Late 2016, Netflix announced a surprising partnership with Comcast.
Netflix’s streaming content is now available through Comcast’s X1 cable boxes. According to a Barrons report, Comcast loves entertainment companies, and cable once attempted to acquire Disney. Would Comcast make a merger offer to Netflix in 2017?
The third important factor to watch in 2017 is the company’s ability to create good content without paying a fortune, according to Barrons.
Netflix, Inc. (NASDAQ:NFLX) faces a strong competition from Hulu, HBO, YouTube and Amazon. All of those companies are spending huge amount to create the best original video content, which is key to attracting subscribers.
The company plans to spend about $6 billion this year on content on a profit-and-loss basis, up from $5 billion in 2016. The company is looking to have originals represent 50% of the content on its service.
Speaking Monday at the UBS Global Media & Communications Conference in New York, Chief Content Officer Ted Sarandos said that the company’s original program lineup will grow to up to 1,000 hours in 2017, more than doubling from 2016.
In addition, the streaming company is planning to 20 unscripted shows in 2017, as well as to double the number of scripted shows in production. The 20 unscripted shows will include global competition series, Ultimate Beastmaster, produced by Sylvester Stallone and The Biggest Loser EP Dave Broome. The series will be shot separately in the US, Brazil, South Korea, Mexico, Germany and Japan.
Recently, the streaming giant signed a content deal with Singaporean broadcasting and media conglomerate Mediacorp to boost its Chinese-language content library by acquiring 20 television shows.
Last year, Netflix expanded to more than more than 130 new countries including India and Pakistan. At the end of the first quarter, the service had 34.5 million international subscribers and 47 million U.S. subscribers.