Netflix Should Invest in High-Value, Short-Form Content and Exclusive Creator Deals, Analyst Says

As Netflix aspires to reach a $1 trillion market cap by 2030, Wells Fargo analyst Steven Cahall believes that the company’s next big investment should be high-value, short-form content and exclusive, multi-year deals with creators.

He sees short-form video content as a potential third pillar of growth, along with sports and ads, that will broaden the streamer’s engagement, deepen its library of content, help the company navigate generational changes as engagement grows on TikTok, social media and user generated feeds on YouTube, and make a $1 trillion market cap aspiration feel possible.

“Some of the bigger creators on YouTube have high production value content with huge, built-in audiences. Their annual viewing hours rival big Netflix originals,” Cahall, who raised the bank’s price target on Netflix stock from $1,222 to $1,500 per share, wrote in a research note. “Moving creators exclusively to NFLX could be an opportunity to add subscribers, engagement and ads, all at an attractive ROI.”

Wells Fargo estimates that Netflix paid an average of $81 per 1,000 hours viewed on content in 2024, with top originals making an average of $132 per 1,000 hours viewed. In comparison, Cahall believes the company could pay top creators an average of $60 per 1,000 hours viewed.

While Netflix has recently moved into live programming, Cahall argued that type of appointment viewing will “always be limited for a mostly on-demand service.”

He pointed out that Netflix’s ramp up of live and sports content has been “very piecemeal and will likely remain so” due to most major sports rights being locked up between now and the end of the decade.

Cahall’s call for Netflix to push into short-form video content comes as YouTube lead TV viewing for the fourth consecutive month in May with a 12.5% share, while Netflix trailed behind in second with a share of 7.5%.

“We think short-form premium content that has helped YouTube track ahead of NFLX in US TV time (and potentially time per user) presents a unique opportunity for nearer term growth,” he said.

Netflix co-CEO Ted Sarandos has previously knocked YouTube, arguing that it’s in the “killing time” business as opposed to the “spending time” business.

He added that YouTube is a good platform for creators to “cut your teeth on” or develop an idea that can then be brought to Netflix where they would assume the financial risk.

While Netflix has been focused on capturing the share of TV watching that’s not on its platform nor YouTube, Sarandos has said the company is competing with the Alphabet-owned video platform for the chunk of viewing geared towards “professional content.”

In order to reach its $1 trillion market cap goal, Netflix is looking to double its revenue to $78 billion and triple its operating income to around $30 billion by 2030. It’s also eyeing about 410 million subscribers and roughly $9 billion in global ad sales by 2030, according to figures leaked to the Wall Street Journal.

Outside of its content, Netflix has expressed an interest in adding video podcasts to the platform. The company is also targeting a late 2025 opening for its Netflix Houses in Pennsylvania and Dallas, with a third location opening on the Las Vegas Strip in 2027, which will offer live immersive experiences based on its popular programming, a theater to watch movies and shows on the big screen, shopping and dining.

Shares of Netflix have climbed 90% in the past year and 44% year to date.

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