there are 2 barriers to entry. nflx is ubiquitous and has is the incumbent. but this idea that another player has to come in a pay $1.2B in content is bogus since the content owners charge less for services with fewer eye balls. they DON'T have to pay $1.2B.
1. content owners have all the bargaining power over netflix. they can eat netflix's lunch. just as what they are doing to the cable tv companies.
2. usage based pricing is already here in mobile and may come in wireline. there are some caps already but they are high.
3. TV everywhere is their biggest competitor. HBO GO will probably not be stand alone...but u never know!
4. the competitors are going to come in this market and compete fiercely with netflix. for one, I KNOW DISH network is coming in and is going to compete head one with netflix big time. they stuck their toe in the water a few months ago.
Above post was meant as reply to you.
HBOGo is not a competitor to NFLX. Redbox is not really either - it only competes with the DVD by mail, and they are not mutually exclusive.
NFLX licenses end of life cycle content in bulk for a flat fee. These other providers stream or rent on demand for a fee. HBO pays a lot more for first run content. And you have to pay 4-5 times the cost for HBO that you do for NFLX.
First run DVD is not NFLX market. At least not yet. May never be. NFLX is growing and has grown like mad because they offer value to the end user and the content owner tp show older end of life cycle (meaning no theatrical, DVD sale, DVD rent or major broadcast revenues left to milk) films. They may also do well showing reruns on demand.
Simple. You don't compare HBO with a movie theater do you? You can't compare it with NFLX either. They are all at different points of content distribution.
NFLX not only has first-mover; its logo is becoming as recognizable as APPL's & Ko's, and the Mercedes tri-star. Don't underestimate logo power.
Currently, more than 50% of NFLX's streaming hours are comprised of TV shows.
NFLX is on the path to becoming the first streaming TV station, with your favorite oldies and new series produced in-house.
By the time VZ gets its act together, NFLX will have cobbled together xx new deals and produced xx new series.
You don't get it. Content owners LOVE NFLX.
You have to separate out first run DVD release from end of life cycle content. Warners recently stopped Redbox and NFLX DVD from being able to buy DVDs for rent until 56 days after release. The reason they did this is they felt they could maximize DVD sales and VOD pay-per-view if they had 2 months instead of 1 month under the previous deal. But what happens once the DVD rental demand tapers down to zero, after all the premium channels have run the film to death, and commercial TV has already run the movie?
These are the films NFLX gets to license. These are films that are not making the distributors any money at all. Until NFLX came along that is. NFLX provides the distributors with millions or tens of million of dollars in new cash for the right to stream these end-of-life films to their customer base.
NFLX created a value proposition that is a win win win for NFLX, the content owner and the end users. Nobody expects to see first run movies for $8 a month. But they get tons of great films available to them on demand for a very low price. And in turn the distributors get new cash flows they never had before and NFLX makes money on the deal too.
Now why would content owners want to kill NFLX? You said yourself they would earn less money if the licensee had fewer customers! So if the content owners supported HULU and HULU stripped 1/3 the customers from NFLX, NFLX would not pay 1/3 less they would pay 1/2 less, and HULU would not pay 1/3 of what content owners lost, they would pay 1/4 maybe. Content owners lose if they damage NFLX.
No, what you see happening is a battle to sell first run DVD streams on a pay per view basis. That will not effect the current NFLX model at all. However, nothing will preclude NFLX from entering this side of the business if they felt they could do it without damaging the brand or their relationships with content owners and providers.
Another fact to consider, cable companies are cracking down on the high data usage netflix users create, Verizon comes in with their own competing product and makes it so their users will benefit from joining and dropping netflix. Bye bye subscribers
Best Buy sent out a survey asking if anybody was interested in an "imagined" Apple TV. Not even real...just somebody caught the wrong direction. Best Buy probably bought Apple stock sometime.... probably selling into this rally.
Netflix rumored to be in the rumored Apple HDTV. Probllem is every new HDTV with internet already has Netflix. So the Apple Tv with Netflix that gos out the door will leave a Sony/Samsung/Panasonic/etc. HDTV with Netflix in the warehouse. Sounds like a zero sum game for the company.
this is retarded because netflix is already in the apple tv and on all apple devices. the market should have known already that it would be on the tv. what they need to realize is that apple will ALSO have its own competing SVOD service on the apple tv. and they will probably try to differentiate it against netflix.
In my humble opinion, I believe the spike has to do with the street coming to the realization that NFLX spends nearly $1BN a year in obtaining its content. While I don't know the CMV of the inventory that it currently has, RBOX/Verizon will soon see that the barriors to entry into this space takes a lot more then just having a press release to articulate that they are doing so.......