Netflix in 2015
Don't be jealous, but I'll be taking a time machine I just got for a few test drives over the next few days.
I have the destination locked on 2015, and I'll check out a few of the companies that intrigue me the most. What are they up to? Are they trading higher or lower? Can you suspend reality long enough for a completely fictional though entirely possible snapshot of the future?
My first stop this time: Netflix (NAS: NFLX) .
Yes, the Netflix you loved in 2010 and loathed in 2011 is every inch an independent company in 2015. Buyout rumors still come and go, but CEO Reed Hastings has no plans of cashing out.
Yes, Hastings is still CEO. What did you think?
Crawling through 2012
After back-to-back weeks of strong gains to kick off 2012 -- leaving you where you are today -- I wish I could tell you that Netflix's fourth quarter was the blowout quarter to silence the bears.
It wasn't. Netflix continued to bleed subscribers through the fourth quarter. The average-revenue-per-subscriber spike that bulls were initially hoping for after last summer's rate increase failed to materialize, as couch potatoes continued to downgrade their plans, often choosing between streaming and DVDs.
Things got better after that. They had to.
Subscribers -- on a global basis -- began growing again by the first quarter. Netflix turned heads when domestic subscribers inched higher during the second quarter of 2012. Where were they going to go?
Netflix did get some new competition in 2012, but it didn't come from the usual suspects. Blockbuster actually retreated in scope through 2012. Redbox and FiOS did live up to the streaming speculation, but neither company was willing to bankroll the premium content to match Netflix at its price point. Amazon.com (NAS: AMZN) is the one current competitor that gained traction early in 2012, but when shareholders and analysts grew more concerned with the company's deteriorating margins in promoting the Kindle and its digital initiatives, CEO Jeff Bezos scaled back on that front.
Apple didn't roll out a Netflix killer when its iTV -- Apple's full-blown smart television (yes, it acquired the trademark) -- rolled out in the fall of 2012. The rumored Web-based pay TV service also failed to materialize right away. Studios and cable networks were reluctant to arm cord cutters with the scissors that would eat into their juicy cable and satellite television revenue.
Apple's bar-raising flat screen revolutionized the way we interact with our TVs, relying on seamless access to iTunes for piecemeal streaming video rentals that ultimately led to the cord cutting the pay TV industry was trying to avoid.
It's the end of the fat cable bill as you know it -- and you feel fine.
Google's push came in 2013, realizing that it couldn't let Apple have all of the fun. In a move to fortify its then-fledgling Google TV platform, Google rolled out an unlimited streaming service that blended licensed Hollywood content with free and premium YouTube content (yes, there's premium YouTube content in 2013).
Parting shots from the future
You may be wondering whether Netflix is still dishing out optical discs in 2015. It is. There will never be a streaming service that offers every title. Netflix never came through with its Qwikster era promise to begin offering video games on disc, though it did team up with a popular cloud-based gaming company in 2014 to offer bundled pricing for both services.
Netflix's global subscriber count is closing in on 30 million in 2015. Subscriber growth has been steady, but clearly not explosive. The real driver at Netflix from 2013 to 2015 has come primarily from accelerating average revenue per user. Once Netflix began offering new releases as piecemeal streams in the latter half of 2012 -- taking advantage of its massive base of tethered users to push the content that studios wouldn't dare license under the unlimited model -- customers learned to rely more on Netflix than DVD rental chains or video on demand for fresh content.
Netflix is still not close to its summertime highs of 2011, though it has handily beaten the market since 2012. It may seem like cheating given my time-traveling contraption, but I'm sticking to my bullish CAPScall on Netflix in Motley Fool CAPS.
Come back tomorrow for another trek out to 2015.
At the time this article was published The Motley Fool owns shares of Apple, Google, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com, Apple, Netflix, and Google. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz has been a Netflix subscriber and shareholder since 2002. He does not own shares in any of the other stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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