Trefis Says US Streaming Is Key To Netflix Inc. Value

With Netflix Inc. NFLX shares up a whopping 81 percent in the year to date, it's obvious that the company's original business model of sending DVDs through the U.S. Postal Service is long dead. A bare 9.5 pecent of Netflix' annual revenue of $6.77 billion derives from DVD subscriptions, according the financial Web site Trefis. http://www.trefis.com/stock/nflx/model/trefis?easyAccessToken=PROVIDER_6cb527391292b79c31c4a1ee6e20e2c9ae8e6504&from=pdf:1 About 60 percent of revenue derives from domestic streaming subscriptions, followed by 31 percent from international streaming. Most of Netflix' value "hinges on its U.S. Streaming services," where the company has a margin of about 30 percent and 39 million subscribers, Trefis said. Netflix has additional subscribers in about 50 countries, and although the international market presents a huge potential, "it also presents obstacles," according to Trefis. Low broadband penetration and speeds, local competition and content licensing complications, could present risks to Netflix' expected international growth rate, Trefis said. Netflix is also facing a growing phalanx of competitors, both foreign and domestic, that could threaten its future. Along with Amazon.com Inc. AMZN and Hulu, Dish Network Corp.'s DISH Blockbuster brand and Comcast Comcast Corp. CMCSA also compete with Netflix. Time Warner Cable Inc.'s TWC HBO plans to launch a stand-alone subscription service in 2015 as does Sony Corp. SNE. Apple Inc. AAPL and Google Inc. GOOGL might just get thrown into the mix. The competition not only puts pressure on Netflix's subscriber growth, but also increase content costs due to bidding by competitors, Trefis noted.