Netflix, Inc. (NASDAQ:NFLX) is now bigger than Yahoo! Inc. (NASDAQ:YHOO), according to data from the intraday session yesterday. Netflix touched a market capitalization of $39.21 billion to surpass Yahoo’s market cap of $39.12B. Ten years ago, Yahoo had a market capitalization of almost $54 billion while Netflix’s market cap was just somewhere around $1 billion.
However, Netflix has been struggling to sustain growth across its subscriber base in the last couple of quarters. The company’s annual growth has dropped sharply from 24.6% in Q1 2013 to 16.06% in Q1 2015. The slack in growth has nothing to do with the quality of Netflix’s services, but it has everything to do with Netflix market dominance in a near-saturated market.
The Spanish Push
Netflix is already looking to the Spanish language as a catalyst for growth as growth in its U.S. markets continues to slow. The Hispanic demographic is growing at an impressive rate amidst the U.S. population. Pew Research Center notes that the U.S. Hispanic population has grown almost six times from 9.1 million in 1970 to 53 million in 2012. Hence, it makes business sense for Netflix to court the Spanish audience
Netflix has already started adding Spanish contents. The added contents include “La Reina del Sur”, “El Señor de los Cielos” and “La Familia P. Luche,” and “El Chapulín Colorado”. The addition of Spanish content should help Netflix attract more subscribers from the Hispanic demographics in the United States.
In addition, the Spanish content should help Netflix’s international push as Netflix tries to establish itself in South America, Central America, and Mexico. Interestingly, Spanish is the language with the second largest number of speakers behind Chinese and ahead of English.
Netflix Chief Content Officer, Ted Sarandos could be quoted saying “We’re thrilled to be working with Univision and Telemundo as well as a range of amazing Latin American content creators to enrich our Hispanic content mix in the U.S.”
The Chinese Push
Chinese has the largest number of speakers in the world and Netflix is working on using this information to its advantage. Earlier in May Netflix revealed that it was already having discussions with Chinese online broadcasting companies about entering the Chinese market. China doesn’t look like the kind of place you’ll just breeze into with streamed content because of censorship and regional licensing blocks. However, Netflix shareholders will be better off it if Netflix is able to succeed in its Chinese expansion plan.
A successful Spanish and Chinese push will assist Netflix in reaching its goal of expanding into 200 countries in the next two years. Interestingly, the expansionist plan is already supporting the bullish thesis on Netflix and the bullish sentiment should continue.
