by BESS HOWELL
Corporate Headquarters 
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+1 (408) 540-3700
In 1997, Reed Hastings and partner Marc Randolph founded Netflix. Initially, the company was founded to offer online movie rentals. Consumers were able to pick from a selection of titles and have them delivered to their homes. Two years later, Netflix became a subscription-based service, providing customers with unlimited movie rentals for a monthly rate. In 2002, Netflix became a publicly traded company on NASDQ. In 2007, Netflix introduced its extremely popular movie and television streaming service. International expansion began in 2012, Netflix becoming available in Latin America and the Caribbean. Netflix introduced original content in 2013, including the award-winning shows “House of Cards” and “Orange is the New Black.” Now with over 60 million global subscribers, Netflix is a notable name and pioneer in the television industry.
Netflix’s 2015 first quarter earning results were extremely mixed, but in the end left investors happy and the company optimistic about the future . Netflix reached the analyst forecasted revenue of 1.57 billion dollars, but per share earnings dropped to 38 cents. Although Netflix surpassed the previous year’s revenue, EPS dropped over 50 cents from 2014. This can be partially attributed to the Q1 net income, at 23.7 million, which decreased 55.4% from one year ago . This loss is a result of the strong U.S. dollar, which greatly lowered international revenue. Without loses due to the foreign exchange rate, the per-share earnings would have been recorded at 77 cents . Netflix stock increased over 18%, reaching an all time high of $530 dollars. Analysts believe this is due to the massive subscriber growth, which increased by 4.9 million in the first quarter of 2015 for a total of 62.3 million , 500,000 more than the company had expected. Stocks may not stay at the high price they reached, as CEO Reed Hastings proposed a stock split in the near future. If the stock split does not happen however, FBR & Co analyst Barton Crockett predicts that Netflix shares could reach $900 within the next year . With a loyal consumer base, growing subscribers, and plans for global expansion, there is not much in the company’s way for it’s numbers to only go up.
Global expansion has become a huge part of the Netflix business model. As subscriber growth slows in the United States, the company looks to other markets in order to both raise revenue and increase opportunities . Currently operating in over 50 countries, Netflix announced in January that they planned to launch the service in 200 countries by 2016 , with the hopes of going global by 2020 . Although the company currently loses money in it’s international business, they predict it to be profitable by 2017. Despite these loses, Netflix is extremely well received in its abroad markets. It was released in early April that less than a year after being launched in Europe, Netflix buttons are being added to remote controls that will be shipped all over the continent . Already in 2015, Netflix has become available in Cuba , Australia, and New Zealand , and is set to launch in Japan this coming fall . The company is also looking into the possibility of launching in China. Global expansion means the opportunity of having content viewed over the entire world, which will open Netflix up to many opportunities for both licensing and producing even more material.
Netflix Originals and Exclusives
In a consumer survey released yesterday that was conducted by FBR & Co, Netflix users said that they prefer the Internet streaming service to television . Much of this has to do with the original content Netflix has been producing in the last few years. On February 27th the company released the third season of its award winning original, “House of Cards,” which received global attention. It was released on April 2nd that the show’s fourth season would air sometime in 2016 . March 6th marked the premier of “Unbreakable Kimmy Schmidt,” and on March 20th their new dramatic thriller “Bloodline” was released. On April 10th Netflix aired Marvel’s “Daredevil,” the first of a five series-deal . The company also released the teaser for the fourth season of “Orange Is The New Black” two days ago . For the rest of 2015, Netflix plans on releasing five more original series , as well as five additional original programs geared towards children .
At the Sundance Film Festival in January, Netflix made a deal with the notable Duplass brothers . Netflix will finance four films produced by the team, which will go to directly to the service after a short theatrical window. This partnership paid off at SXSW this March when Netflix obtained the exclusive global rights to the film “6 Years,” Which was produced by the Duplass brothers  This film was not part of the deal signed in January, and thus was an extra acquisition for the company.
Netflix recently introduced its intentions for multiple new documentary projects. Teaming up with Silverback Films, the company that created “Planet Earth,” Netflix plans to produce an eight-part natural history series entitled “Our Planet.”  This four-year project is set to air in 2019. On March 4th, the company also announced a planned partnership with Leonardo DiCaprio and production company Appian Way to create a series of Netflix exclusive documentary projects . DiCaprio will produce all of the projects, which will concern the environment and conservation.
Already in the first quarter of 2015, Netflix has partnered with various tech companies to help promote the brand and increase subscribers. On March 25th T-Mobile announced that if customers buy a Samsung Galaxy S6 phone, they will get a free one-year subscription to Netflix . The logic behind this partnership is to both drive the sales of S6 phones at T-Mobile, and create more potential long-term subscribers for Netflix. Separate from T-Mobile, Samsung enticed consumers in Australia earlier this month to buy from a series of new 4K smart TVs by offering six free months of Netflix . This partnership came just weeks after the streaming service launched in Australia.
Netflix also came out with it’s first set of “Netflix Recommended TVs,” part of a program that the company launched in early 2015 to help integrate itself better with smart TVs. The recommendation is meant to promote the TV’s easy Internet access capabilities and help Netflix become more easily accessed through the television rather than the computer. The TVs will come from companies like Sony, LG, TCL, and Insignia, and will include the Netflix logo when in retail .
Netflix is truly an innovator in the television industry. CEO Reed Hastings said in a recent interview that “Internet TV is going to replace linear TV” within 20 years . At the current rate Netflix is going, that could likely be possible. Netflix has excellent financials, global prospects, a loyal and growing subscriber base, notable content, and forward thinking business strategies. There is no reason why they should not be able to reach their goals in coming years.
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