Plus with competition on its heels, Netflix has had to spend to maintain its lead. Besides, nobody seems to complain that Amazon posted a loss of $274 million in the same quarter. The good news, though, is that Netflix continues to grow subscribers at an impressive rate, adding more than 2 million domestic streaming subscribers plus 1.81 million international ones.
The company is growing subscribers while also improving margins -- across each reporting segment. This means that profitability will continue to improve despite the concerns about content costs. In that regard, Netflix may not have much to worry about for long -- not if the company continues to produce solid hits such as
House of Cards.
As I was watching, I had forgotten that I was on Netflix and not HBO or Showtime. In the long term, if Netflix is able to produce such original hits, this will benefit investors and lessen Netflix's dependency on outside content, many of which takes a meaningful chuck of its profits.
In other words, House of Cards just might have been the foundation for a mansion. And this has not gone unnoticed from rivals. For instance, according to CBSnews.com, Apple (AAPL), which has its own streaming ambitions, is reportedly in talks with HBO to bring HBOGo to Apple TV. But will this be enough?As I've written recently, the biggest game-changer for Apple would be to acquire Netflix -- especially now since Netflix has proven capable of delivering original material. For that matter, Netflix's library is already much bigger than what HBO can offer Apple. And it would only cost Apple 8% of its $137 billion in cash. What's more, that Netflix just recently signed a content sharing deal with Disney (DIS) makes this a deal that Apple can't pass up -- not if it really cares about beating Google (GOOG) in tech and in television. Plus, the lure of Disney offers Apple extra leverage to grow its iTunes business as it will allow subscribers to also stream movies from Disney subsidiaries such as Pixar and Marvel.
In the meantime, investors have to be impressed with this new Netflix and this incredible growth. Though Netflix has been criticized for its "grow at all cost mentality", the company has instead believed "if we build it, they will come." Although many didn't believe in Netflix's infrastructure builds, but this has worked perfectly. Today it's a House of Cards. In time, investors might be in mansions. At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned. Follow @rsaintvilus This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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