Why NFLX will be under $50, sooner rather than later
"Netflix's success is attracting more competition. Perhaps the most formidable new entrant is Amazon.com Inc., which includes a free video streaming feature to online shoppers who pay $79 annually for discount shipping. Amazon's 2-month-old streaming service so far only offers a fraction of the TV shows and movies available through Netflix."
There is a minimal barrier to entry.
Dish, AAPL, Facebook, Amazon, all have or can easily obtain the infrastructure, and have the name recognition.
FLX will be another TIVO or Blockbuster when this pump ends, everyone believes that, even the current pumpers, with a high degree of confidence.
As I said many times already, NFLX is blocking competition by intentionally OVER_PAYING for content to create a barrier to entry and restrict competition similar to scheme with WMT which create a class action suit in 2006. AMZN, GOOG and others when asked how do you make sense of a $7.99 plan and they respond by saying they cant rationalize it period. TWC CEO also made such comments. I would not bet on competition to enter in the same form as NFLX except for DISH......by the way I expect the lawsuits to fly against NFLX just like in 2006 either thru the Justice Dept anti-trust division or thru class action suits much like in 2006.
You just outlined a perfect scenario for contracting margins. if you think a few hundred million bucks of content cost will deter google or amzn, you better think again....chump change compared to the bundled benefits they will perceive.
U got to be kidding. Same arguments of high content fees and even blocking content like hbo will apply to amzn also. And what library does amzn have relative to Nflx? Offering a $79 service is just a monetizing idea. Sustaining that is the key.
These comments from the short players are getting better and better everyday. Seems they all drink from the same Kool-Aid jar. I could see AMZN at some point in the near future, maybe one to two years down the road, and APPL is already providing movies to its customers via iTunes at a few dollars a pop on movies. Would not take much to make that move, but DISH?! Come on, Ergen does not have the technical skills to turn that Blockbuster purchase into anything useful. He acquired SlingMedia and hosed that all up, and he could not get his IPTV venture to pan out as well. He also was in the process of trying to develop an iPhone App like Direct TV, but could not get the "bugs" worked out. The techincal expereience he needs would NEVER work at Dish because of his ways and the way he treats employees. Dish is a joke and to think that the purchase of BB was a ssmart move, is a dumb thought. He more than likely bought it at a discount to prevent other companies from gaining a competitve edge over him even further.