Despite Increasing Competition, Netflix to Remain Tops in Streaming

Netflix to Remain TopsNetflix, Inc. (NASDAQ/NFLX) got my attention on Tuesday after announcing a massive fourth quarter, reminding me why I have been bullish on the stock for so long. Threatened by emerging rivals such as, Inc. (NASDAQ/AMZN), Hulu, and Yahoo! Inc. (NASDAQ/YHOO), Netflix proved why it is the “Best of Breed” in video steaming and everyone else is a “wannabe” for now.

Content Is King in the Streaming Business (And Netflix Knows It)

If you use Netflix, you would have noticed the increased content, specifically the original programming, the company had promised and is now delivering. The company spent some $9.5 billion on content last year and it’s working in its favor.

Some 57 million people around the world in about 50 countries now access Netflix. Of course, Netflix is not one to be simply status quo; it has its sights set on expanding into the 200 other countries that have broadband ability within two years. On the surface, while this may appear optimistic, especially within the two-year timeframe, I wouldn’t put it past Netflix to do so.

In the fourth quarter, Netflix reported a 26% jump in revenues, driven by 1.9 million new subscribers in the U.S. and a record 2.43 million internationally. While the domestic market is the top producer at 39.1 million, the scope and potential on foreign soil is the most attractive. There are 18.3 million watching Netflix outside of America, but the trend looks bullish as the company makes its way into new regions.

Netflix’s Plans for Expansion

International growth has beaten U.S. growth in three straight quarters. Australia and New Zealand are coming online in March. Of course, China is intriguing with its 1.3 billion people, but gaining access may be difficult, based on the country’s tough stance on viewership. Asia will likely be the area Netflix wants.

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Competition Not a Threat to Netflix

As for the rivals, Netflix is well ahead at this time. Hulu, for instance, is U.S.-centric and has no international exposure. is new to the game and has a lot of catching up to do, while the new HBO streaming service is also lagging.

The key will continue to be content and early entry into the market. Netflix is leading in both factors. For content, it’s spending big and it’s working. Plus, it is already establishing its presence worldwide and is aggressive in expansion.

Revenues are estimated to grow 23.0% in 2015 followed by 20.1% in 2016, based on Thomson Financial estimates. Netflix is also estimated to earn a whopping $7.20 per diluted share in 2016.

It’s clear to me that Netflix is the top streaming play, but at $400.00 a share, investors may want to wait for weakness, keeping Netflix on their watch lists for now.