In a recent interview on Bloomberg TV, L2 Founder Scott Galloway said Netflix will have to charge high-end users more given its rising content costs. The company announced on January 22, with the release of its fourth-quarter 2013 financial results, that it has $7.3 billion in content obligations.
Galloway believes Netflix does not get the credit it deserves. It went through one of the most successful pivots of all-time. Its business model changed from DVD rental to streaming once it put Blockbuster out of business. However, Galloway questioned Netflix’s current stock price (around $400 a share) considering it was recently trading at $70 per share.
Additional competitors will appear in the Netflix space, Galloway said. Cable companies have raised prices at a much higher rate than the Consumer Price Index and invited competition. As a result, Amazon, Google, Netflix and many others “jumped in the water.” See full interview here.