“Arrested Development”, “Shrek”, and “Sherman and Mr. Peabody” are all part of Netflix move towards original content. A deal between Netflix and DreamWorks has been made, providing Netflix the rights to develop television series with original animated DreamWorks characters, as well as animated classic characters. While the financial terms of the deal are not made public, Netflix stock jumped 7%. (Pepitone, 2013)
The consistency of Netflix increasing stock price has allowed for a return to the Nasdaq100 index. As an index reserved for industry leaders, Netflix was picked up in 2010 when it shares were hovering around $200.00 a share. In 2012, shares deflated to $90 a share and the Nasdaq100 cut them from the index. This was during the decision made by Netflix to offer DVD rentals and online streaming as two different plans, or members could retain the all-in-one plan at a higher price. (Kelleher, 2013)
Like a cat that lands on its feet when it’s dropped, Netflix quickly recovered. Their shares have grown by 147% since being cut from the Nasdaq100 in December of 2012. Their performance can be looked at from two angles, their increase in revenue and their negative cash flow. For the time being, the revenue is giving them the appearance of a healthy stock. They were welcomed back to the index on June 6, 2013.
The entertainment giant is less concerned with short term profits, but is focusing on the long term. They stand the best chance at continued success by offering up original series. They can draw in new customers with content not available elsewhere. Existing customers, who may have pondered the idea of cancellation, may stick around through the end of a series. With the damage they did to blockbuster in the video business, they are now looking to make HBO a major rival. Netflix Ted Sarandos puts it this way, “to become HBO faster than HBO can become Netflix.” (Salmon, 2013)
True form may be seen as an ogre to rivals, Netflix shareholders see only the fair princess that lies beneath. After dropping to $90 a share last year, Netflix thought may have been, “but I don’t understand, I’m supposed to be beautiful.” Shareholders replied with, “but you are beautiful.” (Shrek, 2001) In 2014, we may see the first originally programing of the Shrek series. As for their stock remaining in the kingdom of “Far, Far, Away”, keep an eye on the spin-offs.
Works Cited
Andrew Adamson, K. A. (Director). (2004). Shrek 2 [Motion Picture].
Andrew Adamson, V. J. (Director). (2001). Shrek [Motion Picture].
Kelleher, K. (2013, June 5). Netflix bulls vs bears: Who has the upper hand? Retrieved June 19, 2013, from CNNMoney: http://tech.fortune.cnn.com/2013/06/05/netflix-bulls-vs-bears-who-has-the-upper-hand/?iid=EL
Pepitone, J. (2013, June 17). Netflix to debut original DreamWorks Animation shows. Retrieved June 19, 2013, from CNNMoney: http://money.cnn.com/2013/06/17/technology/netflix-dreamworks/index.html
Salmon, F. (2013, June 13). Why Netflix is producing original content. Retrieved June 19, 2013, from Reuters: http://blogs.reuters.com/felix-salmon/2013/06/13/why-netflix-is-producing-original-content/