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Here’s Why Netflix Stock Could Rebound In The Third Quarter, Despite Analysts Slashing Forecasts

Crucial quote: CreditSights analysts Hunter Martin and Jordan Chalfin, who admit future competition is a looming risk, wrote: “Despite our Underperform recommendation, it is important to highlight that we are not members of the ‘Debtflix’ permabear club.”

Topline: With its third-quarter earnings due next week, Netflix looks set to prove doubters wrong after a rough few months by showing Wall Street that it can maintain growth and not lose footing in the streaming wars.

  • Once a high-flying tech stock that helped drive the bull market higher, Netflix shares, which currently trade near $280, have been flat in 2019—down 0.05%.
  • The stock has lost over 30% since mid-July, when investors dumped shares following a disappointing second-quarter earnings report that showed a decline in U.S. subscriptions, the first such drop since 2011.
  • While revenue grew 26% in the latest quarter, that showed a downward trend compared with the 40% growth posted a year earlier.
  • The company’s slowing revenue and subscription growth is a sign that the streaming wars are heating up: Netflix CEO Reed Hastings admitted as much last month, warning of increasingly “tough competition” coming from Apple and Disney.
  • Disney+ and Apple TV+ are both priced cheaper than Netflix and will continue to compete for market share.
  • Netflix shares rose almost 5% on Thursday, in part thanks to reiterated confidence from Goldman Sachs analysts, who said that it is unlikely to be replaced as the “primary streaming choice” for consumers.

Further reading: Wall Street analysts are generally positive on Netflix’s long-term prospects: The stock has 31 “buy” ratings, ten “hold” ratings and four “sell” ratings, according to Bloomberg data.

  • UBS analyst Eric Sheridan recently lowered his price target to $370 from $420 per share, while still maintaining a “buy” rating. While he predicts the short term to “remain volatile,” citing weak demand in markets like Brazil and the U.K., Sheridan sees solid growth in the long term.
  • Goldman Sachs analyst Heath Terry also lowered his price target, to $360 per share, but reiterated Netflix’s upside potential thanks to “a stronger seasonal period for subscriber growth” and a bolstered content lineup for the rest of the year.
  • Piper Jaffray analyst Michael Olson puts Netflix’s price target at $440 per share, similarly citing a “more engaging content slate” in the third quarter. Trailer views for Netflix originals are up 17% from the previous quarter, he points out, thanks to the return of more popular series, such as Season 3 of Stranger Things.
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Crucial quote: CreditSights analysts Hunter Martin and Jordan Chalfin, who admit future competition is a looming risk, wrote: “Despite our Underperform recommendation, it is important to highlight that we are not members of the ‘Debtflix’ permabear club.”

What to watch for: The company will report third-quarter earnings on October 16.

What to watch for: The company will report third-quarter earnings on October 16.

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I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I’ve reported at Money Magazine, The Villager NYC, and The East Hampton Star. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

Source: Here’s Why Netflix Stock Could Rebound In The Third Quarter, Despite Analysts Slashing Forecasts

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The world’s most popular streaming service Netflix has suffered a rather dramatic drop in its stock prices. Namely, the Netflix stock price lost has dropped a whopping 20% in just the past several weeks. So in this video we will offer a closer look at the Netflix stock analysis to help determine what you can expect the Netflix stock price to be like throughout the rest of 2019. What caused this significant Netflix stock crash had a lot to do with the service’s expectations regarding new subscribers. Instead of the estimated 5 million, last quarter only saw a mere 2.7 million new users, which understandably brought the Netflix stock down to what we are seeing today. Furthermore, competing service providers like Amazon Prime and HBO have put additional pressure on Netflix stock 2019 prices, contributing to their rapid drop since mid-July. However, that might very well soon change, as the management of Netflix anticipates another 7 million increase in its list of subscribers this next quarter. So, essentially, if you are asking yourself the fundamental question of “Is Netflix stock a buy right now?” the answer is: it could be if you believe subscriber growth is a certaintyYes, it most certainly is. But more importantly, in our video on Netflix stock analysis 2019 we will also cover all the angles of trading how to profit from Netflix over the course of the next few months. Watch our full Netflix stock analysis to 2020 for a comprehensive overview of all the most important Netflix stock news to be aware of, as well as the factors influencing Netflix stock prices at the moment. #Netflix #Stocks #Trading *** Explore trading and start investing with Capital.com. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.8% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

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Cinema Chain iPic Files For Chapter 11 Bankruptcy: Enter Netflix, Apple Or Amazon?

In a move that surprised many in the movie industry, luxury cinema chain iPic filed for Chapter 11 bankruptcy this morning and announced it is pursuing either a financial reorganization or a possible sale of the circuit.

iPic indicated in the filing that “the financial restructuring will allow the company to further improve and enhance its theaters and dining experiences, continue to provide an unparalleled guest experience that is evidenced by the over 2 million iPic Access loyalty members, and continue with its expansion plans.”

The circuit currently operates 16 locations in nine states and has expansion plans for several more in the coming years. CEO Hamid Hashemi, who previously founded the Muvico Theatres chain, began iPic in 2007 and has grown the chain from its infancy, purchasing the Village Roadshow chain and transforming it into the circuit at the forefront of the luxury cinema experience.

While the company avowed it would explore restructuring options, what is especially intriguing about the filing is its proclamation that it is actively exploring the sale of the chain. The court filing indicated that several entities have been granted access to the circuit’s financial data.

It would not be surprising to discover that one of those companies might be Netflix. When Landmark Theatres was put up for sale last year, both Amazon and Netflix actively kicked the tires on a possible purchase, striving to secure a theatrical footprint through which it could release its films. At the time, I mentioned in a Forbes article that it was a curious approach as Landmark already played most Netflix films, such as this past December’s multiple-Oscar winner Roma. Why they would want to buy a chain that was already exhibiting Netflix content was baffling.

So far this morning, the name Netflix is the one on most industry observers’ lips, and if the Landmark purchase was head-scratching, then the purchase of a circuit chain that has even fewer locations would be even more peculiar. Perhaps the fact that Netflix already has a marketing partnership with iPic is the genesis of these rumors. For example, if you drive past the iPic Westwood, you’ll see an enormous vertical billboard on the side of the theater not for a current or upcoming film but for Netflix content.

To me, what would make more sense is if an entity such as Amazon or Apple might dip their toe into the exhibition waters. Amazon has hinted that their existing release strategy of adhering to the 80-to-90-day release window might be up for debate. Having their own exhibitor in which to feature their content, especially around awards season, might be extremely beneficial. The same goes for Apple.

But it would behoove any company interested in the circuit to do their due financial diligence. iPic was launched as a luxury cinema brand that would appeal primarily to adults 21 and over. However, with Disney garnering a larger and larger market share the industry can expect more films that appeal to the under-18 crowd for whom iPic has little interest. Five of the top ten films so far for 2019 are films geared toward children, including the aforementioned Lion King, Toy Story 4, and Aladdin, along with the latest installments of the How to Train Your Dragon and The Secret Life of Pets franchises. In both 2017 and 2018, only two of the top ten films for the year were family offerings.

With this shift toward family fare, it’s essential to note that tickets for children at some iPic locations can reach $18-23. That ticket price may be acceptable for a couple on an evening out, but a parent taking their two kids to see Lion King could drop close to $100 before even entering the auditorium. The Korean band BTS has a special event cinema showing this coming Wednesday of their Bring The Soul: The Movie film. The AMC Century City, just down the street from the iPic in Westwood, is showing the film at a ticket price of $15. At the iPic, the cost is $32. It’s not difficult to figure out which theater a parent will take the BTS fan in their family to.

Get the popcorn ready because things are about to get interesting in the movie business.

Follow me on Twitter or LinkedIn. Check out my website.

I have over 20 years of experience in the entertainment business and am the Founder and CEO of Scout 53 Entertainment Consulting, which provides global entertainment business analysis, content distribution and revenue generation opportunities for cinemas, producers and in-theatre tech entities. I previously served as President of Distribution at Sony Pictures as well as in top-level executive positions at both STX Entertainment and Fathom Events. During my time at Sony, I crafted and instituted release plans for over 60 films that grossed over $100 million at the domestic box office and over 100 films that finished first at the box office on their opening weekend. I live in Los Angeles with my wife and 15 rescue animals.

Source: Cinema Chain iPic Files For Chapter 11 Bankruptcy: Enter Netflix, Apple Or Amazon?

Hey Netflix, The Real Problem Is You’re Too Damn Expensive

Credit: Getty Royalty Free

Credit: Getty Royalty Free

So is Netflix the Napster of streaming entertainment? Remember Napster? It allowed fans to download music for free, and illicitly. Apple helped smash the upstart by launching iTunes, which allowed people to download songs legally, cheaply and easily.

The theme music around video streaming company Netflix is ominous of late. After some unwelcome news, Netflix stock is down almost 10%. Well, it’s about time.

The company has been an investor darling for a long while. Too long, in fact. Yes, Netflix has turned out great original programming (starting with “House of Cards”) and shown some fine films and beloved TV reruns. But the recent potholes it has hit reveal the unpleasant truth: The stock is way overvalued.

Netflix’s scorching growth rate was responsible for putting it into the same exalted tier as its tech betters.  The streaming outfit belonged among the other members of the FAANG group as much as a scrappy 5-6 junior varsity point guard would among 6-10 NBA superstars.

Despite the inflated stock price, Netflix’s market cap still is dwarfed by the tech titans’ value: $142 billion versus $573 billion for Facebook, $973 billion for Amazon, $946 billion for Apple and $795 billion for Google parent Alphabet.

In revenue terms, the contrast is as stark. Netflix garnered just under $16 billion last year. At the same time, the other four’s revenue ranged from Apple’s $266 billion down to Facebook’s $57 billion. Netflix’s sales look puny in comparison.

But then check out their trailing price/earnings ratios. Netflix sports a towering 127 P/E. Amazon has the largest multiple, with 82. The rest are higher than the S&P 500 yet hardly stratospheric, with Facebook at 30, Apple at 17 and Alphabet at 29.

How in the name of Benjamin Graham and the other investing gods does Netflix deserve such a towering P/E, far in excess of the Big Tech quartet’s? Maybe the stock’s current downdraft is the start of a long-overdue reckoning.

Netflix’s stock slide started last week when the company announced it had lost the rights to two of its top-watched shows, reruns of “The Office” and “Friends.” AT&T subsidiary WarnerMedia has the rights to “Friends,” which it can put on its HBO Max, while Comcast-owned NBC Universal will play “The Office” on its planned streaming service. Meanwhile, Netflix is burning through cash at an unsustainable pace of $3.5 billion this year.

Then came a second groin kick, during Netflix’s second quarter earnings release Wednesday: Subscriber numbers came in weaker than expected—the company added just 2.7 million paid subscribers, down from its own projection of 5 million. Not helping was its recent price hike, which surely had a role in tempering the growth rate. In the U.S., it saw 130,00 subscribers quit.

That’s why a lot of people are wondering whether Netflix is the next Napster, a disruptive business that paved the way for others but could not last itself. Among them is the ever-thoughtful Stephen Paternot, CEO of Slated, the online film financing marketplace and a streaming expert.

“Netflix is learning the hard way what old school studios have known for a long time: to be competitive and cash-efficient, you’ll need to build a solid library of original content with fewer, bigger projects,” he said in a statement. “Everyone is moving to the subscription model, so start finding—and owning—those blockbuster projects and binge-worthy shows if you want to stay afloat.”

Certainly, on one level, the comparison to Napster is strained. The now-defunct music company’s dubious business, based on swiping copyrighted content, is nothing like Netflix’s subscription model. Napster was sued out of existence. The broader question is: Will Netflix end up in the graveyard as others pass it by? Probably not.

Netflix still has a lot going for it. When the third season of its hit “Stranger Things” landed recently, the viewership was huge. Expect a similar result when the latest (and final) season of “Orange Is the New Black” drops net week. True, some big dogs are getting into its arena. But joining Netflix for viewer, unlike buying its stock, isn’t that expensive, and certainly is less than cable: $12.99 monthly for its most popular plan.

All of which is to say that Netflix has likely carved out a place for itself in the video landscape. It just doesn’t belong in the lofty company of Facebook, Amazon, Apple and Google. And the stock drop may be the market’s waking up to this reality.

Good investing ideas, often contrarian, constitute my brief, here at Forbes. com. Key to that is helping you to build a solid financial future.

Source: Hey Netflix, The Real Problem Is You’re Too Damn Expensive

It’s Not About Ideas. Do What Amazon, Netflix, Uber And AirBnb Did, Head For A Blue Ocean

In this July 1, 2014 photo, Dollar Shave Club CEO and co-founder Michael Dubin poses for photos at the company's headquarters in Venice, Calif.  (AP Photo/Jae C. Hong)

If you want to become an entrepreneur but don’t know where to start, relax. It’s not about ideas, it’s about understanding and researching current industries that have not innovated their products or services and have a large customer market. If you think about what Netflix, Amazon, Uber and AirBnb did, you can clearly see, they created nothing new in terms of products. So, what did they do? They changed the “game” in an industry that was not being innovative and was ripe for disruption. In other words, they headed for a “blue ocean” made famous by management thought leaders W. Chan Kim and Renee Mauborgne in their perennial bestseller, Blue Ocean Strategy.

Blue Ocean Strategy is an approach that challenges everything that you thought you knew about the requirements for entrepreneurial success. Blue Ocean Strategy can be summarized in a nutshell: the best way to beat the competition is to make the competition irrelevant. Imagine that the marketplace is comprised of two sorts of oceans: red oceans and blue oceans.

To discover an elusive blue ocean, Kim and Mauborgne recommend that businesses consider what they call the Four Actions Framework to reconstruct buyer value elements in crafting a new innovation wave. The framework poses four key questions:

  • Raise: What factors should be raised well above the industry’s standard?
  • Reduce: What factors were a result of competing against other industries and can be reduced?
  • Eliminate: Which factors that the industry has long competed on should be eliminated?
  • Create: Which factors should be created that the industry has never offered?

If you think about it, lets review what these market leaders did with Blue Ocean Strategy in mind. Amazon did not build bookstores but built an enterprise infrastructure to have access to one million book titles and competed well with Borders and Barnes & Noble. Netflix did not use stores in their business model to compete with Blockbuster; instead they focused on customer service. Uber did not even try to buy cars and compete with the independent taxi companies, they created a mobile app. AirBnb does not own homes or hotels, instead they redefined the travel experience by uniting existing property owners onto a common easy-to-use platform.

Uber CEO Dara Khosrowshahi, third from left, takes a photograph as he attends the opening bell ceremony at the New York Stock Exchange, as his company makes its initial public offering, Friday, May 10, 2019. (AP Photo/Richard Drew)

Uber CEO Dara Khosrowshahi, third from left, takes a photograph as he attends the opening bell ceremony at the New York Stock Exchange, as his company makes its initial public offering, Friday, May 10, 2019. (AP Photo/Richard Drew)

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Existing marketplaces with lots of competitors live in crowded, shark-ridden red oceans. Red oceans are characterized by multiple firms offering similar products competing mostly on price. Think Target versus Wal-Mart, Sony versus Samsung.  Meanwhile, blue oceans are characterized by untapped market space, demand creation, and the opportunity for highly profitable growth.

In recent years, Dollar Shave Club took on Gillette by offering subscription-based access to razors at a better cost and service. As a potential entrepreneur, just examine large industries or product lines and see if customers are happy with their current choices. Wherever you find customers are not ecstatic, dig deeper. A few years back, Chobani did the same thing to yogurt by offering Greek yogurt, more protein and less sugar. None of these examples showcase a completely new, never heard of before product. But all these companies either innovated the current product in the marketplace or they offered a simple innovation or twist to the business model for their company. In almost every case, the customer is happier with the new company or product. That means they were dissatisfied before these companies came along.

If you want to get a jumpstart on surfacing an opportunity, pay attention to something new you see (craft beer, organic pet food, cloud storage, etc.) and do some research.  Or go to places where you can observe people: malls, airports, universities and just walk around. See what people are doing and not doing. Don’t look for anything in particular, just observe. Another option is to walk through Target or Wal-Mart and slowly walk up and down the aisles. Look for current products that seem over priced or they don’t exactly make the customer ecstatic. Then research how big that industry category actually is. If it’s billions, keep going. Run a few of your best “opportunities” through the Blue Ocean Strategy framework of raise, reduce, eliminate and create.

The founders of Skullcandy did something similar by walking through Target to spot their earphone opportunity. If you want to be an entrepreneur, you have to solve a problem in a big marketplace. To spot a problem, go looking. Once you find some problems, use Blue Ocean Strategy to innovate a solution and perhaps you will create a billion dollar company.

You can read more about what Bernhard has to say on his website and follow him here on his Linked In

I am the Director at the Lavin Entrepreneurship Center, San Diego State University. I oversee all of the center’s undergraduate and graduate experiential programs.

Source: It’s Not About Ideas. Do What Amazon, Netflix, Uber And AirBnb Did, Head For A Blue Ocean.

Meet The Indian-American Host Of Netflix’s STEM Series ‘Brainchild’

Netflix’s new show Brainchild offers a refreshing take on science “edutainment,” but with a twist: The lead is a woman of color.

In the 13-episode first season, released November 2018, the show’s Indian-American host, Sahana Srinivasan, explores STEM-focused topics, ranging from the science of selfies to the rationale behind the widely held “five-second-rule.” Created in partnership with hip-hop mogul Pharrell Williams, the show features a diverse cast that’s intended to appeal to girls and minorities.

Srinivasan, 22, understands the gravity of her highly visible role, one in which she discusses STEM, a field where women and people of color have historically been scarce.

“It’s important, at a young age, to see a role model who looks like you, especially for kids who want to go into STEM,” she says. “When people don’t see themselves represented, they think, ‘What’s the point of even trying?’ and it becomes a cyclical thing with no real progress.”

Mounting evidence suggests that early exposure to STEM drives continued interest into adulthood. As a result, minority on-screen representation can have a strong impact on how children view their future career prospects.

Thanks to the success of Hollywood blockbusters and television programs that feature diverse casts, representation of women and minorities in leading roles has increased over the years. Yet these communities remain underrepresented in media across the board, according to the 2019 Hollywood Diversity report released by UCLA. Though minorities constitute nearly 40% of the U.S. population, they represent roughly 21% of broadcast scripted leads, cable scripted leads and digital scripted leads.

With STEM-forward shows, in particular, women of color leads are few and far between. The two most renowned science education shows for children, Bill Nye the Science Guy and Beakman’s World, feature older white men; popular cartoons like Dexter’s Laboratory and Jimmy Neutron follow the adventures of white, boy-genius inventors; and science-oriented sitcoms geared to adults, such as  Silicon Valley and Big Bang Theory, have white, male leads. When women and people of color are introduced, they often adhere to clichéd cultural tropes, such as the nerdy, virginal Asian-American male or the socially awkward, unattractive female.

Indian-American actress Sahana Srinivasan stars in the Netflix original series Brainchild.”Atomic Entertainment

Relatability is at the heart of Brainchild, Srinivasan says, and her depiction on the show is very much intentional. She eschews the conventional white lab coat in favor of quirky hipster glasses, bold lipstick colors and a changing array of hairstyles—sometimes pigtails, sometimes an updo. The same goes for her castmates, who sport hoodies, skinny jeans and afros.

“A show like this reminds people that science is pretty cool, and it’s not at all nerdy or lame to be curious about these topics,” Srinivasan says. “It tells kids that you don’t have to embody this specific version of what a scientist or researcher should look like.”

http://www.forbes.com/video/6023955335001/

Still in college—she’s a senior at the University of Texas at Austin, studying radio, television and film—Srinivasan wants to dismantle the conventional idea that art and science are mutually exclusive. When she was growing up in Dallas, she took part in local talent shows and performed skits, comedy routines and classical Indian dances. But she never saw STEM fields as a viable career option. “I was so focused on the creative endeavors that I thought that’s all I’ll ever be able to do,” Srinivasan says. “And it’s totally a myth and not true.”

Initially, Srinivasan didn’t realize the impact her role could have on young women of color—and indeed was concerned about being pigeonholed because of her ethnic background and gender. “The show doesn’t really stereotype me. The fact that I’m quirky, funny and passionate stands out more than the fact that I’m Indian and a woman,” she says. But for fans of the show, its diverse representation serves as a source of inspiration, both in the arts and in science. “The feedback, especially from young girls of color, has been awesome,” Srinivasan says. “The cast is very much a true reflection of what we see in real life.”

I’m a reporter covering the various aspects of diversity and inclusion in business and society at large. Previously, I was a reporter at CNBC, where I focused on leader

Source: Meet The Indian-American Host Of Netflix’s STEM Series ‘Brainchild’

is Netflix Making a Documentary About Altcoins?

https://www.pivot.one/share/post/5c7cac211d57e7159bfe9583?uid=5bd49f297d5fe7538e6111b6&invite_code=JTOJYV

Netflix of crypto’ gears up for UK stock listing on mission to democratise mining – The Block

‘Netflix of crypto’ gears up for UK stock listing on mission to democratise mining – The Block https://www.pivot.one/share/post/5bfaa98c0162e75c0a26cb2c?uid=5bd49f297d5fe7538e6111b6&invite_code=JTOJYV

Inside the Binge Factory Netflix Is Hiring Everybody In & Out of Hollywood To Make More TV Shows

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What do you think about gas in the tank for the long term?” asks Cindy Holland, Netflix’s vice-president of original content. It’s a Tuesday morning in May, and Holland and a handful of her direct reports are meeting in the 14th-floor San Junipero conference room of the company’s Hollywood headquarters. They’ve come to discuss renewal decisions for two existing shows, the Drew Barrymore–Timothy Olyphant zombie comedy, Santa Clarita Diet, and the recently launched remake of Lost in Space.

As Holland goes around the room, she stares at a laptop screen filled with the memos her team has prepared. She notes the mixed reviews for Lost in Space. “Do we care?” Not that much, it turns out. The show is renewed for a second season.

As they discuss story lines and other creative matters, there’s talk about “completion,” i.e., how quickly subscribers are moving through episodes to the end of the season. Holland quizzes the room about how the shows are doing internationally and if they’re under- or overperforming in certain territories. Someone mentions that Barrymore and Olyphant traveled to the Philippines to promote season two of Santa Clarita: “It’s the first time we took a show there,” she says, adding that the promotional support seemed to pay off: “We’re really, really excited about the fact that it’s traveled globally.” There’s enough gas in the tank, they decide, for a season three.

The conversation moves on to new projects, including Away, an unannounced drama from creator Andrew Hinderaker (Penny Dreadful) and executive producers Jason Katims (Friday Night Lights) and Matt Reeves (Cloverfield) that revolves around an international group of astronauts on the first-ever mission to Mars. “Do you have a clear sense of who is that core fan base?” Holland asks. “I feel it’s a pretty global show in terms of the cast and the diversity of players,” says one executive. “But I also think because there’s that epic love story at the center, it’s going to attract a female audience.” “You probably also get the sci-fi audience as well, right?” Holland says. “I don’t think we’re going to get a hard-core sci-fi action audience,” the executive replies. “That’s not what this is.”

Also on the agenda is a not-yet-announced limited series. There’s a brief debate over which of Netflix’s many content “verticals” it will fall under. “It’s kind of a hybrid between series and film in terms of the biopic nature,” one executive says. “Right now, it’s projected somewhere between period romance and the black-film vertical,” says another. Adds someone else, “It doesn’t fit squarely in either, so we think there’s a nice in-between.”

The meeting ends in less than an hour, and the futures of four of the roughly 1,000 original titles Netflix plans to make (or acquire and distribute) this year are a bit more certain.

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Netflix’s overthrow of television’s old business model began just seven years ago. That’s when the Silicon Valley company best known for mailing DVDs in little red envelopes outbid AMC and HBO for the rights to a drama from director David Fincher, a remake of the British mini-series House of Cards. It was a big deal at the time, both because of the money Netflix was spending ($100 million for two seasons) and because it was the first hint of the streaming platform’s ambitions to evolve beyond a digital warehouse for other conglomerates’ intellectual property.

House of Cards is airing its final season this fall, and Netflix now makes more television than any network in history. It plans to spend $8 billion on content this year. “I’ve never seen any one company drive the entire business in the way Netflix has right now,” says Chris Silbermann, managing director of ICM Partners and agent for Grey’s Anatomy and Scandal creator Shonda Rhimes, who moved her production company to Netflix last year.

TV has gone through major transformations in the past — cable and Rupert Murdoch’s Fox toppled the hegemony of the Big Three broadcast networks in the 1980s, for instance — but this leap dwarfs all others. Netflix doesn’t want to be a streaming, supersized clone of HBO or FX or NBC. It’s trying to change the way we watch television. Whether it can do that while turning a profit is another matter, given the more than $6 billion in debt it’s amassed during its expansion. But Wall Street seems optimistic: In recent weeks, its overall market capitalization has at times grown past $150 billion, surpassing Disney to become the most-valued media company in the world.

CEO Reed Hastings and tech entrepreneur Marc Randolph launched Netflix in 1997, rolling out its DVD-by-mail service the next year and introducing the all-you-can-watch subscription model in 1999. The service has offered streaming since 2007. But it was the company’s move into original content that has upended so many norms of the TV business: Netflix doesn’t waste millions making pilot episodes of shows that will never air; instead, almost every project it buys is purchased with the intention of going straight to series. It invented the idea of binge-releasing — dropping full seasons of shows all at once, rather than doling out episodes week-to-week, as TV had done since I Love Lucy. Instead of selling its content to international partners, Netflix has eliminated global middlemen and set up shop in over 190 countries, allowing it to debut a new season of an American animated series (BoJack Horseman) or a German thriller (Dark) around the planet, all on the same day and at the same time. It has replaced demographics with what it calls “taste clusters,” predicating programming decisions on immense amounts of data about true viewing habits, not estimated ones. It has discovered ways to bundle enough niche viewers to make good business out of fare that used to play only to tiny markets.

And shareholders have given it the money to poach the top showrunners from ABC (Rhimes) and FX/Fox (Ryan Murphy), committing upwards of $400 million to deny those networks their biggest hitmakers. It’s greenlit series from the past two Oscar-winning directors (Damien Chazelle, Guillermo del Toro) and today’s most successful producer of network sitcoms (Chuck Lorre, whose next show for the service stars Michael Douglas and Alan Arkin). Netflix has also handed out paychecks worth, in some cases, more than $20 million to a constellation of stand-up stars (Chris Rock, Dave Chappelle, Ellen DeGeneres), signed the next generation of talk-show hosts (Michelle Wolf, Hasan Minhaj), and given a new home to older ones (David Letterman, Norm Macdonald). And last month, it announced a deal with Barack and Michelle Obama to make TV shows and movies.

“The first word out of everybody’s mouths in meetings is, ‘How do we deal with Netflix?’ ” says one longtime TV-industry executive. “‘How do we compete with Netflix? What are they doing?’ ” Disney’s pending purchase of much of 20th Century Fox’s film and TV assets — which has prompted a counterbid by Comcast, parent company of NBCUniversal — is in no small part a reaction to the rise of Netflix. Robert Iger, Disney’s CEO, wants the added scale 20th Century Fox’s assets will bring as he prepares to launch Disney’s own direct-to-consumer streaming service next year. The proposed AT&T–Time Warner merger is similarly designed to help AT&T take on Netflix.

Mysterious though it may seem, Netflix operates by a simple logic, long understood by such tech behemoths as Facebook and Amazon: Growth begets more growth begets more growth. When Netflix adds more content, it lures new subscribers and gets existing ones to watch more hours of Netflix. As they spend more time watching, the company can collect more data on their viewing habits, allowing it to refine its bets about future programming. “More shows, more watching; more watching, more subs; more subs, more revenue; more revenue, more content,” explains Ted Sarandos, Netflix’s chief content officer. So far, it’s worked spectacularly well: Netflix has gone from around 33 million global subscribers before House of Cards premiered to over 125 million today. Wall Street analysts have predicted Netflix could flirt with 200 million subscribers by the end of 2020; by 2028, one Morgan Stanley analyst has said, 300 million is possible. “The thing that keeps me up at night is scale,” says Sarandos. “It’s a mind-boggling amount of programming that’s being produced here. How do we keep scaling it?”

One answer is cultural. “I’m building a team that’s oriented as saying ‘Yes’ in a town that’s built to say ‘No,’ ” Sarandos says. That’s not just New Age–speak. It’s practical. To stimulate volume, Sarandos and Holland have put in place an extraordinarily decentralized development and production pipeline, one that allows Netflix to operate like ten or 15 semi-independent entertainment companies — whose output all happens to be distributed by a single service.

“Two layers beneath Cindy have full greenlight” authority, Sarandos says. “The only way that we can do what we do at the quality and volume we’re doing it is to give power to my executives to make those choices.” One agent I spoke to told me that translates to at least “five or six” scripted-development executives he can pitch knowing they have the authority to make a project a reality. The heads of Netflix’s other big divisions — international, unscripted, documentary, stand-up comedy — are similarly able to give an idea the go-ahead. “Most of my team have more buying power than anyone has selling power in Hollywood. My direct-report team can greenlight any project without my approval. They can greenlight it against my approval!” says Sarandos.

I ask Sarandos to give me an example of something that’s gotten made over his objections. He cites What Happened, Miss Simone?, the documentary from director Liz Garbus. Lisa Nishimura, Netflix’s VP of original documentaries and comedy, was a big proponent of the film, but Sarandos wasn’t convinced. “We fought about it for six months,” he recalls. “She came in once or twice a week to say why she had to make this movie, and I would tell her that it’s too expensive, and music docs don’t play very big. She’d come back and explain to me why this isn’t a music doc. She was 100 percent right and I was 100 percent wrong. That was an incredible movie, and as soon as it started delivering, I felt like it was a big miss for me to have held it back that long.” Sarandos was similarly iffy on American Vandal, last summer’s comic mockumentary that ended up being a word-of-mouth hit. He kept telling the development team he didn’t think it made sense; they made it anyway, and now Netflix is working on a sequel.

Lower-level executives aren’t completely free agents. “They have some budget constraints,” Sarandos says. “Somebody who typically can greenlight a $3 million show, but has a $10 million show [under consideration] — they’re going to check first. Cindy will bring things to me that seem [riskier] and be like, ‘Hey, this is why we’re going a bit further on the limb with this one.’ ”

“This [idea] that if you have volume, you can’t have quality?” says Holland. “I think it’s convenient for people who are limited by time slots or budget. If you can have one network that has a dozen shows and they’re good quality, why can’t you have the equivalent of four networks with a dozen shows each? Why can’t you have more than that? We have the ability to support a larger number of artists than most people can.”

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While there’s still room to grow domestically, Netflix’s biggest opportunity for scale is overseas. On a Monday morning in April, I attend a meeting run by Erik Barmack, head of the company’s international-originals team, where a couple of wall-mounted video screens show the names of various staff phoning in, as well as a live feed from the Amsterdam office. Netflix has a division devoted to acquiring foreign programs from networks like the BBC, but Barmack oversees the production of original non-English-language shows made for Netflix outside the U.S., including Dark (Germany), Ingobernable (Mexico), and 3% (Brazil). A number of Netflix American-made originals are popular outside the States — “As a percentage of total watchers, as many people watch 13 Reasons Why in India as watch it in the U.S.,” Sarandos tells me — but in order to compete and grow in foreign markets, Netflix believes it needs to offer subscribers stuff made in their own countries, by local artists.

Netflix’s international push is grounded in lessons the company has learned from its expansions into genres once thought to have limited appeal to American audiences. Big numbers in niche categories prompted Lisa Nishimura, VP of original documentaries and comedy, to suggest the company start making content in those areas. “We started to ask, ‘Is it really niche, or have the distribution channels for those categories been historically disaggregated, making it difficult to actually get scale and momentum and word-of-mouth and all those things that help to grow audiences over the course of time?’ ” Nishimura says. “On the documentary side, people pointed to box office to say, ‘See? It’s tiny.’ What I contended was, that was a reflection of how many people watch a documentary on Friday night in that particular moment in time, not the potential of the actual audience size for the documentary if you made it easily available.”

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