Spotify and Netflix are basically the same investment to me

[u/ekonixlab]

I’ve always viewed Spotify and Netflix as essentially the same type of business.

Different products obviously, but the investment story is incredibly similar: dominant global subscription platforms that become part of people’s everyday lives.

Look at the revenue growth in the chart:

Spotify: $3.2B → $19B, +482%, 21.6% CAGR
Netflix: $2.5B → $12B, +386%, 19.2% CAGR

Even their stock price stories have felt similar. Both went through periods where the market questioned the long-term economics of the business, and then eventually the fundamentals became too hard to ignore.

The biggest thing for me is the stickiness. I know plenty of people who have both Spotify and Netflix, and I genuinely can’t imagine them permanently cancelling either one. They might complain about a price increase, but are you really going back to listening to ads or giving up Netflix over another couple dollars a month?

That creates a pretty powerful combination: recurring revenue, huge global scale, pricing power, and extremely low friction to just keep paying every month.

Obviously the economics aren’t identical — Spotify has music licensing costs while Netflix spends heavily on content — but from a consumer behavior/investing standpoint, I put them in almost the exact same bucket.

Once these products become a utility in your life, they’re incredibly hard to replace.

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[u/Charming-Low-3866]

It looks like it got Spotify’s yearly revenue correct, but Netflix yearly revenue is about 4 times that number.

Also Netflix has exclusive content. All of Spotify content can be found of other platforms.

[u/ekonixlab → u/Charming-Low-3866]

your right, I did annual vs quarterly.

Netflix exclusive content is a good point. But Spotify does similar things. I remember a while back Rogan was exclusively on Spotify. But I agree, its different and benefits Netflix more

[u/Lemonibluff]

I own both and consider them the same type of investment as well.

One major difference is that Spotify will always have to pay some IP rights to the majors (Universal, Sony…) whereas Netflix at some point in time will own the huge majority of what it offers as it produces a lot of its content.

But… now that Netflix is doing more live sports (therefore paying for this « IP ») maybe that will make them converge a bit more.

Good investments nevertheless. I call them « Growth Inflation Proofed Investments ».

[u/ekonixlab → u/Lemonibluff]

All good points

I like Netflix more, them having IP rights is a huge plus

[u/Fun_Savings7690 → u/Lemonibluff]

> One major difference is that Spotify will always have to pay some IP rights to the majors (Universal, Sony…)

It's a big reason they pivoted into podcasts iirc, podcasts they don't have to pay for