Two important developments for investors in Netflix (Nasdaq: NFLX) and the streaming TV sector today. First off, the Wall St. Journal reports that AMC’s hit show ‘Mad Men’ will be carried on Netflix soon. Lions Gate Entertainment (NYSE: LGF), which produces the show, struck a deal with Netflix to stream all seven series:
The deal is worth between $75 million and $100 million, people close to the situation said. That means Netflix is paying close to $1 million per episode of the series, which “Mad Men” creator Matthew Weiner said last week would run seven seasons. Each season has 13 episodes, which Lions Gate licenses to cable network AMC.
The new agreement marks the latest deal that Netflix has struck with a film and television studio. The company has recently inked a slew of deals to add new content to its streaming site, including one with Miramax, which includes “Pulp Fiction” and other iconic independent movies.
That should help Netflix’s growth with content beyond full featured films. Also, on the macro level, a new research report estimates that by the end of this year, 2 million households in the U.S. will have abandoned TV entirely for the web. TechCrunch reports on the growth of the cord-cutting movement:
the big beneficiaries of cord cutting are Netflix, Hulu, and Apple TV. They benefit even if people keep their cable but add Internet TV streaming or downloads to their viewing repertoire, as is much more common… Streaming has helped Netflix in particular in terms of driving new subscriber growth, and it is also arguably a gateway drug to cord cutting. Convergence estimates that Netflix revenues from online-only subscribers in the U.S. will grow from $172 million this year to $578 million in 2013. And if you add in Hulu Plus, the combined streaming revenues from both companies will reach an estimated $800 million in two years.
These Covestor models are long Netflix as of end of day 4/5/11:
– Fundamental Growth from Sparrow Capital
– Deep Fundamental Analysis from Tab Buford
– Bottom Up Analysis and Bottom Up Analysis Aggressive from Epic Advisors
– Venture Capital Aggressive from Yinglan Tan
Sources:
“Netflix to Stream ‘Man Men'” Wall Street Journal, 4/6/11
http://online.wsj.com/article/SB10001424052748703806304576245322457993318.html
“Estimate: In Two Years, Streaming TV Will Be An $800 Million Business for Netflix and Hulu” Erick Schonfeld, TechCrunch 4/6/11
http://techcrunch.com/2011/04/05/streaming-tv-800-million-netflix-hulu/
