To The Moon

$Netflix(NFLX)$ has lost momentum, and here's an opportunity to get it back.

Netflix has seemingly won the streaming battle…or has it?

The company is in the #2 position behind $Alphabet(GOOG)$ ( ▲ 2.45% ) YouTube and has lost share since 2023, when it had 8% of TV time.

Pull in total TV viewing, and Netflix falls to fifth place, even before Fox acquires Roku.

So, why is this moment a golden opportunity for Netflix? I’ll get to that in a moment.

Why Netflix Has an Opportunity Today

OK, so I called this Netflix’s big moment. Why?

Because the competition is distracted. The companies Netflix should fear most in streaming have priorities elsewhere. Let’s go through them one by one.

YouTube (Alphabet)

Alphabet is going to spend at least $180 billion on capex this year, which means it has less money to buy content for YouTube.

No, buying content like the NFL isn’t YouTube’s main model, so I see this as a small hit, but it’s worth highlighting how little the company has made YouTube a priority financially.

Disney

The NFL now owns 10% of ESPN, so $Walt Disney(DIS)$ is in pole position for the next rights deal, but Disney’s finances are focused on the parks.

This isn’t an AI buildout like the big tech companies, but Disney is proving to itself (and investors) that the value in the business is IP and parks, not sports like it was in the cable era. That may mean ESPN is spun off or sold, which will mean a lighter checkbook for content and one less powerful bidder.

Paramount

Paramoun Skydance is in the process of buying Warner Bros. Discovery for $111 billion and will be saddled with ~$80 billion of debt when the deal closes.

The company will control the CBS NFL package, but will it be able to pay to renew it?

NBC Universal

NBC Universal is supposedly going to be spun out from Comcast, separating the cable assets from the content and theme parks (a worse version of Disney). But the problem is Peacock, the streaming service, is a disaster.

Netflix has over 300 million subscribers, and Disney+ alone has over 130 million, so this is a sub-scale streamer with a dying TV business.

Amazon

Let’s be honest, streaming TV is a side business for $Amazon.com(AMZN)$ , and the company’s priority is not falling behind in AI. That’s why it’s spending so much on the AI buildout that it’s taking on debt like crazy.

This is no longer a positive free cash flow business; it’s a debt-fueled business, and that pushes the priorities elsewhere.

Apple

$Apple(AAPL)$ is the one company with the cash and power to buy any content it wants. But Apple has also focused on bespoke content and sports where it can control everything.

I doubt Apple gets into the bidding for the content Netflix will want, which leaves…

Netflix’s Opportunity

All of the biggest competitors (except YouTube, which is a different story given its user-generated content) are distracted with AI or mergers/debt. That leaves Netflix open to:

1. Buy a BIG NFL/sports package

2. Buy NBC Universal

NBC Universal’s streaming service has been a disaster, and Peacock doesn’t have enough scale to be profitable.

But it does have good content.

There’s an NFL package, an NBA package, the Olympics, the English Premier League, college football, and golf rights.

What NBC Universal doesn’t have on its own is streaming scale and the cash to compete with the likes of Alphabet, Disney, Amazon, and Apple. Being acquired by one of the tech rivals is appealing, and Netflix makes the most sense.

The NFL is an even bigger priority, in my opinion. Netflix has dabbled, but it can now make a big swing now that it has a meaningful advertising business. The NFL can opt out of its current deals in 2029 (2030 for ESPN) and is reportedly already trying to renegotiate with current rights holders. As I highlighted above, some of them will be looking to pinch pennies, and tech giants have priorities elsewhere.

Netflix is waiting in the wings.

If Netflix has 17 NFL games per year, it can charge a few extra dollars from each member and add ads during games. Paying $5 billion, or more, for a big package would be worth it given the cash Netflix is already spitting off.

Netflix stock is down 42% from its all-time high, but the company has the opportunity to take share from rivals for the first time in years. It can do this by buying critical content and/or buying out a rival.

Or it can do both!

I think Netflix is in a better position than ever, given how distracted rivals are with AI or mergers/debt.

That presents an opportunity for Netflix and investors.