Netflix could be the first trillion dollar media company, according to one expert.
Transcript:
CONWAY GITTENS: So there are estimates out there that Netflix could become a trillion company by 2030. Does that make sense to you?
MARK DOUGLAS: It absolutely makes sense to me. And there’s a few reasons why. So I can articulate them. So one is organic growth. They continue to grow for their scale pretty rapidly. So that’s one reason. The second reason is and I think this is the most unique, the building a backlog of revenue every time they add a new subscriber. So half of their subscribers now subscribe to the ad supported plan. So they are adding those subscribers at a much faster rate than they’re monetizing them. And so that’s creating this huge backlog of revenue that they’ll unlock in two to three years, when they finally fully figure out how to do ad supported programming and how to monetize it.
And that backlog of revenue, I think, is going to create tremendous incremental growth on the top line for the business. And more importantly, it’s going to create tremendous profit margin growth for them. So you take basically and then we’re seeing that margin growth already. Basically half the customers are coming in at the lowest price point yet. Netflix seems to be coming more profitable every quarter. So just stack all that up. Organic growth, backlog of revenue from all the ad support, people signing up for ad support that’s not actually really receiving ads yet. And then margin growth from both of those. And I think it does lead to Netflix becoming the first billion dollar media company.
CONWAY GITTENS: So is Netflix that next ad behemoth that we should be looking out for.
MARK DOUGLAS: They have the app, I think. Yes they have the opportunity to be that. I think Disney is probably the largest advertising media company in the space. So to get to Disney scale is going to take some effort. But I think Netflix also has global scale, which Disney doesn’t fully have, but so they’re definitely going to be the next one. But they have a lot of execution they have to do to get there. They’re really good at execution. And I think if I would go you can go long on the stock, I would go super long on Netflix.
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