As Netflix continues its shift away from by-mail DVD rental and towards a streaming-dominated model, it will be hard-pressed to maintain its current margins. So says Wedbush Morgan analyst Michael Pachter, who believes that Netflix will have difficulty keeping up its current pace of growth beyond the next year or so.
According to Pachter:
“We believe that Netflix will be challenged to grow at its current pace for more than another year, and we expect its premium valuation to contract,”
Even though Netflix will save money on postage and other logistics as fewer subscribers use its DVD by-mail service, the company will have to drastically increase its spending on content acquisition if it plans to keep its streaming service competitive and current.
Is Pachter right here, Insiders, or will Netflix be able to keep up its torrid pace of growth AND its margins in the coming years?
(via Home Media Magazine)