Last week the media and fellow Fools couldn't jump up and cheer Netflix
It seems logical that over time Netflix will transition to a similar model as cable providers like Comcast
Revenue per video subscriber |
Q1 2010 |
Q2 2010 |
Q3 2010 |
Q4 2010 |
---|---|---|---|---|
Netflix | $12.90 | $12.29 | $12.12 | $11.64 |
Comcast | $68 | $70 | $71 | n/a |
Note: Comcast revenue is for video only.
Notice the falling revenue per paying customer in the fourth quarter showing that despite a rate increase Netflix is getting less from each customer. It appears Netflix doesn't have the pricing power cable providers have.
The trend in monthly profit per customer doesn't look any better, and could come under siege in coming quarters.
Company |
Q1 2010 |
Q2 2010 |
Q3 2010 |
Q4 2010 |
---|---|---|---|---|
Netflix (gross profit/customer) | $4.96 | $4.87 | $4.57 | $4.01 |
Comcast (operating income/customer) | $15.57 | $16.50 | $15.74 | n/a |
Note: Comcast operating income uses margin for all cable products.
The falling gross profit per customer in the fourth quarter only includes a small hit from the Disney
When pricing power doesn't hold up
The revenue per customer trend at Netflix is something Sirius XM
Both Sirius XM and Netflix are really just content delivery companies and as competition heats up for both, the monopoly state they have operated in for the past couple of years will fade away. That is when we will find out how strong their business models really are.
I'm not ready to short a hot stock like Netflix but investors should at least keep an eye on these trends going forward.
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