Netflix: A Fortress of Content

by

The matter of Netflix (NFLX 2.13%) has, of late, presented a series of transactions, a shifting of assets involving Warner Bros. Discovery and, most curiously, the attempted intervention of Paramount Skydance, a maneuver which, in its very structure, seemed designed not to secure acquisition but to demonstrate the inherent instability of ownership itself. One observes these events not with excitement, but with a quiet apprehension, a sense that the very foundations of entertainment are built upon sand.

The prevailing sentiment among those who traffic in these instruments of valuation appears to be one of renewed scrutiny. Is Netflix, after all, still a suitable object of investment? The question, of course, is not whether it is, but whether it appears to be, and to what degree one is willing to accept the inherent uncertainty of appearances. My own assessment, arrived at after a period of prolonged observation, leads me to believe that a certain… permanence, is justified.

The Accumulation

In the year 2007, Netflix introduced a feature known as “Watch Now,” a novelty at the time, a mere adjunct to the physical delivery of discs. However, the true significance lay in the subsequent decision, in 2012, to construct a library of original content. It is difficult to overstate the implications of this act, for it established a protective barrier, a moat, if you will, which continues to widen with each passing quarter. The logic is inescapable: control the source, and you control the flow.

Netflix continues to procure licenses for established programs and films, supplementing its internally generated material. The result is a collection of staggering proportions, a digital archive that defies precise enumeration. As of late 2023, the reported figure exceeded 18,000 titles. Current estimates, subject to the usual fluctuations, suggest a total nearing 33,000 by the end of 2025. It is a number that feels less like an accounting of assets and more like a symptom of something larger, a relentless accumulation that serves no discernible purpose.

This vast repository, assembled over more than a decade, represents a formidable obstacle to any potential competitor. The cost of replication, of attempting to match this scale, is simply prohibitive. Rivals have, therefore, adopted a different strategy, focusing on the pursuit of profitability, effectively conceding the field to Netflix. It is a curious outcome, a victory achieved not through innovation, but through the sheer weight of accumulated content.

Loading widget...

The Perpetual Cycle

This ever-expanding catalog of viewing choices has attracted a subscriber base exceeding 300 million individuals worldwide. The company ceased public reporting of these figures in 2024, a decision that suggests a desire to obscure the true extent of its reach. The number, undoubtedly, has continued to grow, spiraling upwards in a manner that defies rational explanation.

Netflix describes this phenomenon as a “virtuous cycle.” The increasing subscriber base generates higher revenue, which is then reinvested in the creation of more content, attracting yet more subscribers. It is a self-perpetuating system, a closed loop that operates according to its own internal logic. One might wonder, of course, where this cycle will ultimately lead, but such questions are best left unasked.

I acknowledge that there are other factors that contribute to the value of Netflix stock. The management team has demonstrated a consistent ability to navigate the complexities of the streaming landscape. The company continues to explore opportunities for expansion in global markets, and its advertising-supported tier is showing promising growth. These are all positive indicators, but they are secondary to the fundamental strength of its content library.

The stock has experienced a decline of 34% from its peak, a consequence of the uncertainty surrounding the Warner Bros. acquisition. This presents an opportunity for discerning investors to acquire shares at a valuation of 22 times next year’s expected earnings. It is a reasonable price to pay for a company that possesses such an unassailable, if somewhat unsettling, moat.

Read More

2026-01-23 11:12