Netflix and Alphabet are at the forefront of two related megatrends: the shift to streaming video from traditional linear television (i.e., cord-cutting) and the natural shift of advertising budgets to follow eyeballs from television and other traditional media to digital media. After increasing prices for U.S. members at the start of 2019, Netflix could expect to see another year of 20%-plus growth in U.S. revenue. Revenue growth will continue to slow slightly at Alphabet because of the law of large numbers. But if one of its other-bets projects, such as Verily or Waymo, starts bringing in meaningful revenue, Alphabet could quickly reaccelerate its revenue growth. Alphabet is also paying higher traffic acquisition costs as more internet browsing shifts to mobile, where its own Chrome browser is less dominant. So while Alphabet's revenue growth is keeping up with Netflix's for the most part, its operating margin is heading in the opposite direction.
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Feb 22, 2019