Netflix shares jump past $300, but content acquisition challenges lie ahead

Netflix's (Nasdaq: NFLX) ongoing rise to power seems to have no end as the video rental company's shares lurched beyond $300 in NASDAQ trading.

Coming on the heels of its move to expand its business into new international markets, including Latin America and the Caribbean, Netflix's stock price reached to an all time high of $301.50 in yesterday's trading but then declined to $290.74.

As part of its expansion strategy, Netflix members that live in Mexico, Central America, South America and the Caribbean, would be able to watch not only U.S.-based, but also local and global TV programs and movies on TVs and other electronic devices such as Blu-Ray players, PCs and smartphones. Playing into the diverse languages of these regions, users would be able to access Netflix services in English, Spanish or Portuguese.

Despite its meteoric growth, Netflix, which has long drawn the ire of cable operators and telcos alike for driving customers away from their respective video offerings, will see its content acquisition costs will increase in 2012.

According to Michael Pachter, an analyst at Wedbush Securities, Netflix's content costs could rise from $180 million in 2010 to $1.98 billion in 2012.

As reported in FierceIPTV, the rise in content acquisition costs might be one of the reasons why Netflix has not made a move to acquire online video rival Hulu.

For more:
- vision2mobile has this article
- here's FierceIPTV's take

Related articles:
Netflix to launch service in Latin America this year
Netflix content acquisition costs to soar in 2012

Suggested Articles

Verizon posted strong broadband additions in Wednesday's third quarter earnings across its residential and consumer sectors.

Windstream Enterprises has upgraded its WE Connect Management Portal to give users more visibility across their SD-WAN networks.

As further validation to split IBM up, Big Blue's cloud division posted double-digit revenue in the third quarter.