Increasing cost to license content

Netflix was able to generate exceptional profit margins its first few years because content owners underestimated its potential customer base, and as a result they licensed content to Netflix for very low rates. Now that many of the original contracts with content owners have expired, Netflix is struggling and will struggle more as the owners expect much more compensation in return for their valuable content. Netflix's piece of the pie can only be so big when there are a multitude of competing digital content providers vying to purchase the same content from the owners/creators. … "Increasing cost to license content" has a significant impact, so an analyst should put more weight into it. "Increasing cost to license content" will have a long-term negative impact on this entity, which subtracts from the entity's value. This statements will have a short-term negative impact on this entity, which subtracts from its value. This qualitative factor will lead to an increase in costs. This statement will lead to a decrease in profits. "Increasing cost to license content" is a difficult qualitative factor to overcome, so the investment will have to spend a lot of time trying to overcome this issue.