In summary, a lot.
What does this mean?:
Though investors were impressed with Neflix’s results, the stock price
now takes into account their expectations for future growth (their expectations have been “priced in”). To satisfy its investors going forward, Netflix must continue to churn out bonafide hits. It hopes to do so by investing in original content (it expects to spend upwards of $5 billion in 2017
). It is a high-risk, high-reward strategy that requires significant upfront investments with no guarantee of success.
Sprint is hungry for subscribers and is hoping to attract customers with exclusive content.
Why should I care?:
Expect to see a lot more original programming from Netflix and its closest competitors (e.g. Amazon) as they step up their efforts to attract and retain customers. This is great if you’re a fan of high quality television. However, the emphasis on exclusive content has made it harder for television fans to cheaply access the shows they care about. It seems necessary that customers to subscribe to multiple streaming services to access to all the content they care for.
Also, look out for news of Netflix’s first major flop. The company’s risky approach to investing in original content means that big bets that do not attract subscribers would have a significant negative impact on the company’s financials and market cap.