With at least 75 million users in over 190 countries watching more than 125 million hours of streaming TV shows and movies each day, Netflix, Inc. (NASDAQ: NFLX) continues to be a juggernaut in the digital entertainment space. However, the competition is becoming fierce, with Amazon.com, Inc. (NASDAQ: AMZN), Hulu and Alphabet, Inc.-owned YouTube (NASDAQ: GOOG) going all out to win the streaming video war. For Netflix, it's all about content, and the company is expecting to spend more than $1 billion in 2016 by adding high-quality original programming to its massive lineup of movies and TV shows. In fact, among Netflix’s top 12 suppliers who generate large portions of their revenues from Netflix, 11 are content providers, either through licensing agreements or as developers of original content. Although the United States is the single biggest source of content for Netflix, the company draws from suppliers across the globe, including Germany, Canada, South Korea, Mexico, Japan, France and Luxembourg.
Many of Netflix’s top content suppliers, such as Amazon, are also competitors in the digital media space.
DreamWorks Animation SKG, Inc.
Viewers from around the world have come to know DreamWorks Animation SKG, Inc. (NASDAQ: DWA) through its iconic family features, such as "Shrek" and "Kung Fu Panda." In addition to animated feature films, DreamWorks offers high-quality entertainment through television specials and series, and live entertainment. DreamWorks is perhaps best known for its 3D-animated films.
Netflix and DreamWorks first worked together in 2012, signing a deal for 300 hours of original television programming content. This was expanded in 2015 to more than 1,600 television episodes. The new deal also gives Netflix rights to the entire DreamWorks Animation feature film library. In 2015, Netflix accounted for 33% of DreamWork’s $916 million in revenue. As of April 10, 2016, DreamWork’s market capitalization was $2.07 billion.
Gaumont Film Company
Founded in 1904, the Gaumont Film Company (OTC: GAM.PA) is the first and oldest film company in the world. As of 2016, it is a prominent producer and distributor of films. Its American subsidiary, Gaumont International Television, is gaining traction through the original programming it does for Netflix, having strung together four highly popular made-for-TV series, including “Hemlock Grove” and “Narcos.” The company generates 19.9% of its revenues from Netflix. In 2015, Gaumont’s revenues were $246.5 million.
As one of the leading Internet companies in the world, Amazon.com, Inc. has been doing everything it can to close the gap with Netflix in the streaming entertainment space. Amazon may be one of Netflix’s fiercest competitors, but it also happens to be a major supplier. For several years, Netflix has been moving pieces of its streaming operation to Amazon Web Services. In January 2016, it completed the migration, having moved everything except its own content delivery network, which it uses to distribute directly to the big network operators, such as Comcast Corporation (NASDAQ: CMCSA) and AT&T, Inc. (NYSE: T). Amazon generated $107 billion in revenue in 2015. As of April 10, 2016, Amazon had a market capitalization of $275.45 billion.
Although Starz, Inc. (NASDAQ: STRZA) is one of Netflix’s largest content suppliers, the two companies have had a bumpy relationship over the years. In 2012, Starz ended a longtime distribution agreement with Netflix because its executives felt that the company was contributing to the disruption of the television ecosystem, especially with Starz’s pay-TV partners. Three years later, the two companies went into business together again, with Netflix licensed to stream more than 2,500 movies, TV shows and concerts from Starz. In 2015, Starz generated $1.63 billion in revenue. As of April 10, 2016, its market capitalization was $2.48 billion.
RTL Group SA
Another competitor shooting for Netflix in the European market is RTL Group SA (OTR: RGLXY), and it is also one of Netflix's major suppliers. RTL Group is a German-based multimedia company that operates television and radio stations throughout Europe, and produces its own programming and Internet media. RTL Group, which is developing plans to launch a rival streaming service for the European market, licenses its programming to Netflix for its European subscribers. In 2015, RTL Group generated $6.599 billion in revenue.