07-25-2012, 01:31 PM
Netflix isn't in competition with any large companies. Really I don't think they're in competition with anyone at all. Apple is in a completely different ballgame. You might as well say Blockbuster is competing with DVD sales at Best Buy as suggest that Netflix is competing with Apple. I think the depth of competition there is pretty shallow.
I think the fall today was based more on Netflix's predictions of slow growth this year than anything else. Their numbers for the quarter were right around the middle of what analysts predicted and their revenue and subscriber base was up.
Basically I think NFLX as a stock is suffering more from miscalculations by investors than anything real. The idea that they are competing with Apple is a prime example of the sort of miscalculation driving the stock down while the company itself appears to be doing fine, and is growing. (Maybe Apple COULD compete with Netflix but I don't know of any ala carte streaming package in the works from Apple and I don't think it's the revenue model they're interested in.)
Amazon's threat to Netflix is more debatable. I don't think Amazon Prime, which is more analogous to the Netflix model, will ever be a serious threat because it's spread too thin. For $79/year you get free two-day shipping, the Kindle lending library and free streaming videos, but the streaming video selection will necessarily always suck because $6.58/month only affords them so much money for licenses especially after you deduct the free shipping and book costs from it.
A bigger question may be this:
If all movies could be rented online for $2.99 per viewing, would everyone continue to use Netflix or would they ditch it in favor of pay-per-view? Pay-per-view rentals is something I could see as a potential Netflix killer, assuming people preferred that payment model.
The point is moot at the moment, though, because the selection of pay-per-view movies is always really terrible, presumably because movie studios don't like it. And Netflix DID defeat the old pay-per-view physical DVD rental places already, based on their physical rental half of the business, which they still have.
Bottom line, I think NFLX is a good buy right now and I think analysts agree.
I think you'll see them back over $100, though I wouldn't expect to see that until next year. They need time for their overseas efforts to get rolling. They're still operating with no real competition in America, though.
I plan to stay long on Netflix. Even if another ala carte movie streaming service shows up tomorrow, they have a lot of ground to cover to seriously compete with Netflix and I just don't think any big companies are interested.
(In the event of a real collapse, I do think Amazon or MAYBE Apple would buy them out because in the wider view, Netflix helps drive sales of tablets, which is what Amazon and Apple really want, albeit for different reasons.)
I think the fall today was based more on Netflix's predictions of slow growth this year than anything else. Their numbers for the quarter were right around the middle of what analysts predicted and their revenue and subscriber base was up.
Basically I think NFLX as a stock is suffering more from miscalculations by investors than anything real. The idea that they are competing with Apple is a prime example of the sort of miscalculation driving the stock down while the company itself appears to be doing fine, and is growing. (Maybe Apple COULD compete with Netflix but I don't know of any ala carte streaming package in the works from Apple and I don't think it's the revenue model they're interested in.)
Amazon's threat to Netflix is more debatable. I don't think Amazon Prime, which is more analogous to the Netflix model, will ever be a serious threat because it's spread too thin. For $79/year you get free two-day shipping, the Kindle lending library and free streaming videos, but the streaming video selection will necessarily always suck because $6.58/month only affords them so much money for licenses especially after you deduct the free shipping and book costs from it.
A bigger question may be this:
If all movies could be rented online for $2.99 per viewing, would everyone continue to use Netflix or would they ditch it in favor of pay-per-view? Pay-per-view rentals is something I could see as a potential Netflix killer, assuming people preferred that payment model.
The point is moot at the moment, though, because the selection of pay-per-view movies is always really terrible, presumably because movie studios don't like it. And Netflix DID defeat the old pay-per-view physical DVD rental places already, based on their physical rental half of the business, which they still have.
Bottom line, I think NFLX is a good buy right now and I think analysts agree.
I think you'll see them back over $100, though I wouldn't expect to see that until next year. They need time for their overseas efforts to get rolling. They're still operating with no real competition in America, though.
I plan to stay long on Netflix. Even if another ala carte movie streaming service shows up tomorrow, they have a lot of ground to cover to seriously compete with Netflix and I just don't think any big companies are interested.
(In the event of a real collapse, I do think Amazon or MAYBE Apple would buy them out because in the wider view, Netflix helps drive sales of tablets, which is what Amazon and Apple really want, albeit for different reasons.)