Logo On Wall

Image source: Netflix.

Five years can be an eternity when you're looking at a company in the midst of a sea change. And that's exactly the place where we find Netflix (NASDAQ:NFLX) right now.

As Netflix attempts to expand to all corners of the globe, with the expensive original content production thrown in for good measure, the growth plan can work out in many ways. Good or bad, there are huge changes afoot to raise both risks and potential rewards to sky-high levels. 

Which way will the winds blow? We asked three Motley Fool contributing analysts to weigh in on how Netflix might navigate the challenges and opportunities of the next five years:

Demitrios Kalogeropoulos: With its global expansion done and the U.S. market at steady subscriber levels, Netflix should look like a mature business in five years. Whether that domestic user base settles at Reed Hastings' 60 million-90 million member goal remains to be seen. But we do know this about its market position: Regardless of size, Netflix will likely keep acting like a small upstart on the hunt for new ways to disrupt the entertainment business.

Consider just the recent past. It wasn't long ago that the idea of releasing (all at once!) a never-before-aired series sounded crazy. After all, how could you build interest in an unproven show without the traditional episodic broadcasts? Netflix took that gamble with House of Cards and carried it through with more popular hits such as Orange is the New Black. Now it's standard operating procedure for the streaming giant.

Since then, the disrupting has only sped up. Netflix has a talk show in the works for 2016, testing the idea that time-sensitive content can't work in an on-demand platform. It will also be streaming the big-budget film Crouching Tiger Hidden Dragon: The Green Legend on the same day that the movie hits IMAX theaters next year. Maybe film release windows are more flexible than we thought. And Netflix is trying out an episodic approach to movies, with four feature films starring Adam Sandler headed directly and exclusively to its streaming service.

Netflix could have responded to its huge growth over the last few years by getting more conservative and fitting more comfortably into the entertainment industry. But we haven't seen that happen. If anything, Hastings' appetite for boat-rocking moves has only grown, which should make for plenty of drama in the years ahead.

Screen Logo

Image source: Netflix.

Anders Bylund: From where I sit, I see a better than 50% chance that Netflix will become more profitable than Walt Disney (NYSE:DIS) by the end of 2019.

At that point, Netflix streaming services will most likely be sold on every continent except Antarctica. The Americas and Europe will have nearly universal coverage. Key Asian markets like South Korea and Japan will be joined by experimental incursions into India and China. Netflix will be big Down Under. In the Middle East and Africa, the company will have to pick its battles very carefully, but it's going to happen.

Opening up new markets is an expensive project, and that effort will still be in play five years from now. But Western Europe will be profitable, margins in North America will rival or even beat arch rival HBO's 35%, and at this point, Netflix has become a well-known center of premium original content.

Running low on additional expansion markets, the strategy shift from growth to profit-taking will have begun. More than 700 million households on this lonely planet will be viewing TV-style video content over Internet connections -- and Netflix will be an obvious option for most of these potential customers.

When this happens, Netflix could become more profitable than Disney. In 2019 or 2020, Netflix could garner operating profits in the neighborhood of $20 billion. Today, Disney's pre-tax income stops at $12.3 billion.

It won't take a massive P/E ratio to justify a $100 billion market cap by then. After all, Disney is worth $152 billion right now.

Netflix could beat these estimates, driven by higher adoption rates and faster global broadband growth. The company could also fall short in several ways. But overall, this looks like a reasonable five-year destination.

And I'm perfectly happy holding on to my Netflix stock while this global growth story plays out.

Andres Cardenal: Growth rates will probably slow down in the U.S. over the coming years, as Netflix is moving beyond its initial growth stage and maturing over time. The good news is that profitability will most likely be considerably higher in the U.S. five years down the road.

Contribution margin in the U.S. came in at 28.6% during the last quarter, considerably higher than the 23.7% contribution margin the company produced in the same period during 2013. Management estimates that it will reach a contribution margin of 30% in the U.S. in the first or second quarter of 2015, and it intends to increase margins by 200 basis points per year after that.

International markets will probably be a major growth driver for Netflix in the years ahead. International streaming revenues grew 89% during the third quarter, reaching $346 million during the period. This represents approximately 23% of total streaming revenues, and this percentage will probably expand materially over the coming five years.

Netflix will also continue leveraging its enormous amounts of data regarding the viewing habits of its members, to purchase and produce valuable content. This will consolidate Netflix's competitive position in streaming via high-quality differentiated content.

Competitors such as Amazon.com and HBO will continue building their libraries too, but the online streaming industry will probably offer enough room for many different players to profit and thrive at the same time. Customers often subscribe to multiple services in traditional TV, and there is no reason to believe streaming will be much different as consumers cut the chord and ditch cable.

Anders Bylund owns shares of Amazon.com, Netflix, and Walt Disney. Andrés Cardenal owns shares of Amazon.com, Netflix, and Walt Disney. Demitrios Kalogeropoulos owns shares of Netflix and Walt Disney. The Motley Fool recommends Amazon.com, Imax, Netflix, and Walt Disney. The Motley Fool owns shares of Amazon.com, Imax, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.