Ben Silverman, By Alec Perkins from Hoboken, USA [
CC BY 2.0
via Wikimedia Commons
Hollywood titans are getting excited about the unique
worldwide ambition that
brings to the table. Maybe it's time for investors to drool over
the digital video pioneer's international prospects, too.
In a recent
magazine, content production veteran Ben Silverman waxed poetic
about the global reach his productions can gain on the Netflix
"What's incredible about Netflix is its global ambition,"
Silverman said in a discussion about the just-launched
mini-series. "It was the first time I could reference a program
of mine that had launched in America and in multiple markets at
the same time."
By contrast, Silverman's similarly epic Showtime-bound series
took nearly 18 months to reach the French market. The quicker
international release schedule sets Silverman's pulse aflutter
because news, spoilers, and piracy rips travel quickly over the
Internet nowadays. The segmented global release model is starting
to look outdated, and Netflix helps producers sidestep the
And that's where Silverman's incentives match up with those of
Today, Netflix serves more than 50 million subscribers across
the Americas and a generous slice of western Europe. There's a
great big world out there left unexploited. The quicker, the
Netflix CEO Reed Hastings has plainly stated his ambition to
blanket the world in Netflix services. "We hope to be fully
global, everywhere in the world, including China,"
to a reporter from
If and when that happens, Silverman gets his ideal
distribution platform. Create fantastic content, sign a
distribution contract with Netflix, and reach all four corners of
the world overnight. That model would fit the needs of modern
media distribution, given the Internet-powered concerns that
Silverman worries about. And of course, simplified blanket
contracts with worldwide distribution rights must be the perfect
model for Netflix as well -- simpler accounting and fewer
limited-rights problems than the current patchwork of separate
licenses for each geographic market.
And obviously, that complete vision would dramatically
increase the value of the Netflix service.
Today, the company sells subscriptions to roughly 50 million
households in an addressable broadband market of about 180
million households. That's in a world where nearly 10% of the
world's 7.2 billion inhabitants have access to fixed broadband,
and 27% subscribe to mobile broadband services. Mobile networking
is often more efficient than expensive personal cable runs in
Image source: Netflix.
Penetrating China alone would add another 90 million broadband
households to Netflix's coverage map, and Internet access is
growing rapidly in the world's most populous country.
Long story short, Netflix has only reached a fraction of the
current global broadband market. The company keeps expanding into
new countries, year by year, while broadband access also grows
more common all over the world.
In the very long term, Netflix could be looking at an
addressable market for online entertainment north of a billion
global households. Today, 40% of the American broadband market
subscribes to Netflix. Yes, that figure is for the home market --
but then again, it's just an interim number with more growth and
wider adoption still to come.
The company could multiply its subscriber counts and revenue
many times over by making Silverman's global distribution dream a
reality. Content costs will also increase thanks to the far
larger target audience, but
Netflix aims to
reach an endgame with 40% contribution margins in the U.S., and
margins in many abroad markets
to similar levels.
Silverman wants to reach the whole world with a single
Netflix wants the same thing
. And that's where most of the company's growth will happen in
the long term.
Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to
profit? There's $2.2 trillion out there to be had.
Currently, cable grabs a big piece of it. That won't last. And
when cable falters, three companies are poised to benefit.
for their names. Hint: Netflix isn't on the list.
Hollywood Pro Ben Silverman: "What's Incredible
About Netflix Is Its Global Ambition"
originally appeared on Fool.com.
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