Can Netflix Keep Up The Pace In 2016?

This year has been an impressive one for shares of TV streaming service Netflix, Inc. NFLX. Over the past year, the firm's shares have risen 138.2 percent, an impressive figure that investors have widely praised. However, worries about the cost of new content and international expansion have many investors wondering if the company's success story is too good to be true.

The Good

Netflix's subscriber base both in the US and abroad has been constantly growing. This makes the company an attractive play as the firm has no lack of interested customers. The company is working on an international expansion and promised to make its way into some 200 countries by the end of 2016.

The firm is also working to continue upping the number of original series, documentaries, movies and stand-up comedy releases in the coming year. Original programming has proven extremely successful for Netflix, the firm was nominated for several Emmy awards and Golden Globes.

Related Link: Why David Einhorn Doesn't Like Netflix

The Bad

While all of those future prospects are exciting for the company from a growth standpoint, they are also likely to be very expensive. Netflix's latest foray into producing movies has sparked a heated debate among analysts as to whether or not the cost is worth it. With TV series, Netflix can change, edit or even cancel shows based on audience reception, but when producing a movie the initial cost is much larger and there is no chance to revise if it isn't well received.

When it comes to international expansion, spreading Netflix across the globe sounds like a great way to rake in more money from new markets of subscribers, but many caution that the there are several financial roadblocks in the way. For one, many countries lack the infrastructure to support TV streaming. In other places, like Europe, content licensing has proven both tricky and expensive.

The Competition

Netflix isn't alone. While the company may have been the catalyst for viewers' shift from traditional cable to online viewing, Netflix is competing against heavyweights like Amazon.com, Inc. AMZN for market share. Other services like Hulu are gaining ground as well; recent news that Time Warner Cable Inc TWC was considering an investment in Hulu sent Netflix shares drastically lower in November.

Any Bright Spots?

While there are a lot of uncertainties in Netflix's future, many analysts believe that the company is still a relatively good bet. The company isn't likely to post gains of over 100 percent again next year, but the benefits of expanding internationally and releasing new content will probably outweigh the risks.

Netflix is poised to make big moves in 2016 and although there is some risk that goes along with those decisions, a successful expansion will keep the streaming service at the top of the industry.

Posted In: MarketsTech
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