Why My Toddler Is My Stock Advisor

Scott is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Three years ago I led a pretty Spartan existence. Sure, I indulged in a new gadget every now and then, but, in my life, I’ve only purchased one thing on eBay —maybe two on Amazon. I don’t remember the last time I’ve been in a mall.

That all changed in November 2010 when my son was born.

Since my wife and I brought him home from the hospital, our house has become a shrine to the newest in baby gear. Many products claim to make our infant-rearing lives easier, and the chances are we’ve either bought them, thought of buying them, or borrowed them.

Life with a toddler is much the same.

That’s why I believe that Netflix (NASDAQ: NFLX) is heading in the right direction after their recent deal with DreamWorks (NASDAQ: DWA). Keeping a two year old occupied is exhausting—reason enough for energy drink makers to tap into the “new parents market.” And, although I was arrogantly against it three years ago, now I am a strong believer in occupying my son with a video on my iPhone or computer.

I can sing the theme song to a Welsh cartoon about firefighters forwards and backwards. If Netflix offered this content through their service, I would no longer consider cancelling my subscription as I am now. Although this cartoon hits a niche market in America (namely me), there are surely other cartoons for which other parents would be willing to subscribe to Netflix.

Netflix offers service in over 40 countries to over 30 million subscribers. Currently, Netflix has a fair amount of content geared towards children, but the number of TV series, specifically, is limited. This presents an area where Netflix can offer a more substantial amount of streaming content.

Undoubtedly, the most successful film for DreamWorks is Shrek, which grossed close to a billion dollars domestically. The Transformers movies grossed over a billion dollars. If these franchises were adapted to a series available exclusively on Netflix, one that is accessible through the streaming service, it’s conceivable that they would be looking at a new group of subscribers. Although Shrek is much more appropriate for a younger audience, DreamWorks also has kid-friendly franchises like: How To Train Your Dragon, Kung Fu Panda, and Madagascar.

Like the original series, House of Cards, Netflix could also benefit from the DreamWorks production of original content created solely for the purpose of distribution through the streaming service.

Add in foreign markets and this suggests the potential for an extremely lucrative deal which offers Netflix shares plenty of room to run. Not to mention that you’re building brand loyalty with consumers at a young age.

Netflix, DreamWorks, subscribers, and investors may not be the only beneficiaries of this deal—airplanes, restaurants, and other public places may be a little quieter in the near future.

In the meantime, I’ll continue to be on the lookout for new Fireman Sam episodes on Netflix.

scott81236 has no position in any stocks mentioned. The Motley Fool recommends DreamWorks Animation and Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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