Analysts are figuring that Netflix will have added around 3.7 million subscribers to its ranks, giving it 23.7 million, give or take 100,000.
Even if Netflix is shy of estimates, it will likely show enough growth to propel it ahead of Comcast at 22.8 million video subscribers and beyond the 20.2 million subs at Sirius XM Radio.
Because growth has stalled at Comcast’s video business, it will likely have to settle for being third in this particular contest as Sirius XM and Netflix duke it out for supremacy in the entertainment-subscription arena.
Ensuring that Netflix maintains it’s growth – and some analysts predict it will close out the year with north of 30 million subs – is its embrace of digital streaming, where there isn’t much competition yet.
Analysis from NPD, in fact, suggests 61 percent of all movies viewed through the Internet are done so courtesy of Netflix. That’s eight times more than Comcast, the No. 2 purveyor of online movies, notes BMO Capital Markets analyst Edward Williams.
Netflix has partnered with so many consumer electronics manufacturers that its streaming service is on 250 devices, making on-demand viewing of movies and TV shows on TV screens a simple task.
“Following the torrid pace of subscriber growth since Netflix’s Watch Instantly service made its way onto game consoles, we expect subscriber growth to remain elevated,” Williams said.
“Eventually,” added Lazard Capital Markets analyst Barton Crockett, “Netflix may face more competition from larger players that we believe are likely to launch online streaming subscriptions with better content. For now, however, the company has the only meaningful online streaming subscription offering for consumers in the U.S.”
Time Warner’s HBO would like to be considered meaningful online competition some day. It’s rolling out its HBO Go on Apple and Android devices May 2, giving its subscribers 1,400 hours of premium content.
Crockett called HBO Go “the beginning of Netflix alternatives,” adding that, “over time, it could be a factor – better content, a comparable interface, could lessen the interest of some in signing up for Netflix.”
When Netflix reports first-quarter results Monday, analysts will be looking at how much it is spending to get rights to all that streaming content – more than 17,000 movie and TV titles -- that it boasts of.
Some of the recent deals include rights from Lionsgate to stream at least the first four seasons of Mad Men; with Fox for shows like Glee, Sons of Anarchy, Ally McBeal and The Wonder Years; and with CBS for shows like Frasier, Cheers, Twin Peaks, Star Trek and The Twilight Zone.
And the most noteworthy deal was with Media Rights Capital because it was for exclusive rights to stream a “TV” series that hasn’t been made yet, putting it in direct competition – sort of – with HBO and other cable networks.
Crockett figures Netflix spent $171 million for streaming deals in the first quarter, and will spend more than $1.1 billion in 2011. Michael Pachter of Wedbush Securities says Netflix will spend $500 million more this year to secure rights to streaming content than it did last year.
What all this means for the stock, of course, is debatable, but even Netflix’s bulls are cautious, given that Netflix shares have soared 450 percent in two years.
Both Crockett and Williams say mostly positive things in their research notes about Netflix, though neither are recommending that their clients buy the stock. Crockett rates shares “neutral” and Williams rates them “market perform.”
Pachter’s is probably the most bearish view on Wall Street, rating Netflix shares “underperform” with a price target of $80. The stock most recently closed at $252.22, so Pachter is predicting it will fall nearly 70 percent over the next 12 months.
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