Netflix has had an exceptional year with its shares up almost 100% so far this year. But could the streaming giant be the first trillion-dollar media company? Mark Douglas, CEO of MNTN, joined TheStreet to discuss why he's confident Netflix can reach that milestone by 2030.
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Full video transcript below:
CONWAY GITTENS: So there are estimates that Netflix could become a trillion-dollar company by 2030. Does that make sense to you?
DOUGLAS BRAND: It makes absolutely sense to me. And there are some reasons for that. So you can articulate them. One of them is organic growth. They continue to grow at their scale quite rapidly. So that's one reason. The second reason is, and I think this is the most unique, the accumulation of revenue every time they add a new subscriber. So half of its subscribers now subscribe to the ad-supported plan. Therefore, they are adding those subscribers at a much faster rate than they are monetizing them. And that's creating this huge backlog of revenue that they'll unlock in two or three years, when they finally fully figure out how to do ad-supported programming and how to monetize it.
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And I think that revenue accumulation will drive tremendous incremental growth in revenue for the business. And most importantly, it will generate tremendous growth in profit margin for them. So basically, we're already seeing that margin growth. Basically, half of the customers arrive at the lowest price so far. Netflix seems to become more profitable every quarter. So stack all that up. Organic growth, revenue buildup from all ad support, people signing up for ad support who aren't actually receiving ads yet. And then the margin growth of both. And I think that leads to Netflix becoming the first billion-dollar media company.
CONWAY GITTENS: Netflix is also the next advertising giant we should keep an eye on.
DOUGLAS BRAND: They have the app, I think. Yes, they have the opportunity to be. I think Disney is probably the biggest advertising media company in the business. So getting to Disney scale will take some effort. But I think Netflix also has a global scale, which Disney doesn't quite have, but will definitely be next. But they have to do a lot of execution to get there. They are really good at execution. And I think if I go, you can go long stocks, I would go very long Netflix.
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