Netflix track record

One of the best things about capitalist enterprises is their ability to pivot, add related products on the fly, and generally reinvent themselves. Their shareholders and managers have no room for error, they have to make a profit, because it's survive or die. This is not true of government-owned entities. We are all familiar with their pathetic track record.

There are plenty good examples of this, but I was thinking of Vestact-recommended stock Netflix, when reading a good blog post by Byrne Hobart today. He notes:

"Companies are the most theoretically interesting when they're still figuring things out, the most lucrative to own when they've figured out the important stuff and want to scale it. For subscription-based companies, maturity means they've reached whatever level of market penetration their model naturally supports. Consider a business like Netflix, that eventually mostly saturates its primary market. They've realistically tapped into the entire movie-watching audience out there. People will keep aging into the service, and other people will age out or die, but there isn't much they can do."

Or is there? Netflix has focused on expanding into international markets, tailoring content to local cultures and preferences to build a global subscriber base. No maturity out there, it's open season!

Even in the US, population growth and rising income levels mean new households are being formed, and the number of subscribers can keep growing. They also found new ways to reduce subscriber churn, and prevent password sharing. They made sure that their mobile app was as good as their TV platform.

Netflix further diversified its sales, adding gaming, introducing cheaper advertising-supported subscriptions, and placing product ads in shows. Those other revenue streams are growing fast.

It's never "too late" to invest in a well-run company that supplies compelling products and/or services to large customer bases via monthly subscriptions. The best ones won't go ex-growth, they'll just keep getting more inventive.