Netflix’s 3 Big Plans for Growth

Though written off by many, the company still has some leverage in the market

Editor’s note: A previous version of this story had numerous inaccuracies, and this is an updated version.

From one perspective, it looks as if Netflix (NASDAQ:NFLX) is doomed. The streaming video company, once the unchallenged leader of home entertainment’s fastest growing market, is slowly getting sucked dry by the dual troubles of rising content fees and competition from other streaming services.

Content partners like Liberty Media’s (NASDAQ:LSTZA) Starz are walking away from Netflix, turning down offers of $300 million in licensing fees to pursue new opportunities elsewhere. Meanwhile, Netflix can feel Comcast (NASDAQ:CMCSA), Amazon (NASDAQ:AMZN), and others breathing down its neck with cheaper streaming video services. The company’s slight recovery from last year’s implosion, when it lost 61% of its value, may just be the sputtering of a dimming fire.

For investors ready to give up the Netflix ghost, though, remember this: the company still has 21 million streaming video subscribers. Its brand, while tarnished last year, is still strong with consumers and is synonymous with streaming video. The company isn’t slowing down its growth. There are still a few key components of its future business model that can help the company survive and, possibly, thrive.

HD Streaming Video on the iPad

Speaking with Mashable, Netflix’s director of corporate communications, Joris Ever, said that HD video for the iPad is “on our road map” but that he couldn’t share details on when it would be available. Netflix currently offers HD programming through various outlets, but needless to say high-definition content has been in high demand since Netflix updated its app on Apple’s (NASDAQ:AAPL) new iPad to support that device’s cutting edge Retina display.

As of now Netflix streams only standard-definition content on the iPad. If Netflix manages to get up and running sooner rather than later, it will have even more leverage in the mobile/tablet market. The company will need to be careful, though, as distributing HD content typically is more expensive thanks to the larger amount of data being transferred. If Netflix has learned anything, it’s that its customers don’t take kindly to increased fees.

Cable Network

Netflix will likely be offering HD content on more than its streaming service and Blu-ray discs, according to reports from earlier in March. Word is that the company is in discussions with Time Warner Cable (NYSE:TWC), Verizon (NYSE:VZ), and Comcast forge streaming video partnerships, on-demand.  In the words of Netflix, this would make the service more of a direct competitor with HBO and other outlets that serve movie fans via cable distribution and on-demand systems.

As James Brumley wrote for InvestorPlace last week, the additional revenue a Netflix partnership represents makes the venture attractive to both the company and its investors, but it admittedly won’t resolve some of Netflix’s bigger problems.

International Expansion

Netflix’s future isn’t wholly reliant on the U.S. market. The company is steadily ramping up its international presence. Netflix only just opened its streaming service in the U.K. and Ireland this past January, bringing its total number of international markets up to 47 countries.

While Netflix faces stiff competition from Amazon subsidiary Lovefilm and the News Corp. (NASDAQ:NWS) co-owned Sky Films in the region, its support of BBC programming like Top Gear and Torchwood gives it a leg up. Having moved into Latin America in 2011 and the U.K. in 2012, the question is where Netflix will go next.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.

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