the netflix numbers are actually pretty easy. At $8/months, it's ~$96/year ... which is close enough to $100 to make for easy math.
Quick and dirty numbers (on just the domestic streaming).
At 30M subs, run rate revenue is approximately $3B. They had about $2B in content commitments. Delivery costs (i.e. bandwidth) runs about 20% of revenue. So on their $3B, $600M goes to delivery, $2B goes to content, and they have $400M-ish in profits.
NFLX is difficult to value because it's growing so fast and the content cost is a moving target. If NFLX can keep content costs around $2B, then every incremental customer is 80% profit. Every 1M subs they add, is $100M in revenue and $80M in profit (capitalize that at 10x and you're adding $800M in valuation ... keep in mind they added 2M domestic subs in the last 3 months). Some people argue that content providers will demand higher fees as NFLX increases subscribers. I'm not convinced. They walked away from Starz and they cut a deal with Disney that doesn't look any more expensive than what they were paying previously. And they're also building a library of owned content.
It's definitely one of the most interesting stories to watch.
Quick and dirty numbers (on just the domestic streaming).
At 30M subs, run rate revenue is approximately $3B. They had about $2B in content commitments. Delivery costs (i.e. bandwidth) runs about 20% of revenue. So on their $3B, $600M goes to delivery, $2B goes to content, and they have $400M-ish in profits.
NFLX is difficult to value because it's growing so fast and the content cost is a moving target. If NFLX can keep content costs around $2B, then every incremental customer is 80% profit. Every 1M subs they add, is $100M in revenue and $80M in profit (capitalize that at 10x and you're adding $800M in valuation ... keep in mind they added 2M domestic subs in the last 3 months). Some people argue that content providers will demand higher fees as NFLX increases subscribers. I'm not convinced. They walked away from Starz and they cut a deal with Disney that doesn't look any more expensive than what they were paying previously. And they're also building a library of owned content.
It's definitely one of the most interesting stories to watch.