A significant hop in the stock price of Netflix was witnessed recently. As per the reports of ACMA – Australian Communications and Media Authority – this increase was mainly because of the popularity it gained in the country right after its launch. According to Netflix news, it managed to attract over 2.5 million subscribers in the beginning of 2015.
According to people, the company will be able to get as many as 7 million paying Australian users by the year 2020 along with revenue of $800 million that time, which would amount to 10% of the company’s international revenue. As for the gross profit of the streaming media company, it could account for more than 8.5% of its international gross profit if it managed to achieve a contribution margin of at least 25% in Australia in the years to come.
Netflix launched its services in Australia in March of the current fiscal year and since then has concurred 2.5 million video streaming users in the region in almost a time span of four months, making it quite an impressive move. According to ACMA, it has acquired and taken over most of the users who prefer video on demand services in the region.
As per a survey conducted by ACMA, over 17% of the citizens of the country prefer to watch content via SVOD. Of the 1,505 Australian that were included in the survey 78% had claimed of using Netflix services in between the period first six months of the 2015.
In the United States, Netflix has a market penetration of over 45%, which ultimately means that the streaming media service has enough room to grow in the Australian market. The number projected early of 2.5 million subscribers might not all be paying subscribers, some might actually be on an initial trial period. This strategy of having a trial period is mainly a move to penetrate in new market, which is believed to work out for them most of the time.
92% of the video streaming company’s international subscribers are paying users. It is clearly that it is not much of a problem for the streaming media giant to convert its trial-based customers into paying customers.
Consequently, through these factors, Netflix will yet again gain the attention of the Australian market and become the market leader in that region as well. The company’s stock has been trading below 0.34% at a share price of $120.22. The EPS of the video streaming media was reported to be 0.38 with a price to earnings ratio of 320.57. Its current market capitalization is 51.56 billion.