As far as Apps go, I'm sure you will have to go through the Apple App store but at around 300,000 apps, nothing currently competes. I think Apple will allow any content provider into the system. This thing about open/close is nonsense.
I agree that this will be another venue (quite a large one) for a digital player. I am presenting it as another move at bringing the digital revolution along.
My thought of the day: Price trumps until you produce something special!
BTW, I see the current Apple TV as nothing more than market research for helping Apple fine-tune its television strategy. Most likely, within about a year, Apple will launch an actual television; not a set-top box, but an actual television.
Yes, you're right about Apple. I'm not saying they will own the market for movie rentals although they might. What I was responding to was the the use of the term, "hobby". Apple is not getting into TV as a hobby and there's no doubt that they will make a big play for the living room.
"Hobby" is code by Apple to throw the competition off. They had been saying for a while, long before the updated Apple TV was released, that TV was a hobby. Then, in their September release of the new Apple TV, Jobs joked by saying, "One more hobby..."
Apple is very big. The only way to continue to grow, is to conquer new territories. The living room is the one market that would be as big as all of Apple's current business. Apple intends to conquer the living room, so don't be lulled into thinking it's a hobby.
I fully agree that this stock cannot be shorted right now. I see nothing on the short term horizon to hurt this stock and it appears it might march straight up to $75.
I do think that 90 - 120 day delays on disk rentals could be the nail in the coffin of physical disks. Regardless of price, that's a long time to wait to rent the movie.
I stand behind every statement I made earlier that I do not believe CSTR will make an effective dent into the digital world.
I plan to go back into my short when the following things occur:
1) Further push by studios to empower the digital market.
2) An effective end to wholesale closures in B&M.
3) Blockbuster becoming a more viable competitor.
4) Signs of slowing growth for Redbox.
5) The announcement of Coinstar's digital plans, which I believe will be a short opportunity.
For now, good luck with your remaining long!
We'll see how it plays out. For now, I am in your camp as I overly hedged my position to the point that I am net long. So I am hoping for a big run up from here.
But, I'm fairly certain I will be back short by Q1 or Q2. Between yesterday and today, there have been more rumblings about strengthening digital and possibly delaying disk rentals by more time. As to Coinstar entering the digital market, I stand behind every post I made. I will be shocked if they succeed.
Good article. Interesting that Sony cites no affect but made a 28 day deal with Netflix last month.
Today's volatility in CSTR may have to do with this issue as TWX, Bewkes, was very strong on digital today and said they're considering lengthening the 28 days when their deal expires next year.
About dropping the 28 day argument, the linked article supports my contention. They even suggest that 28 days may be too short.
Also, take note of AMZN expanding their VOD.
"VOD numbers also have increased thanks to the 28-day rental window, more than one studio president said. Craig Kornblau, president of Universal Studios Home Entertainment, said the day-and-date VOD for Robin Hood resulted in 1.5 times the business “what equivalent titles have done historically,” and VOD for The Karate Kid performed well for Sony Pictures Home Entertainment as well, according to David Bishop, president of Sony Pictures Home Entertainment."
This board has gone nuts! Time for some more measured, rational discussion. Timewarp, you never responded to my post back to you. Time for you to weigh in.
Have you seen the sudden proliferation of shorts on this board? Most of whom know nothing about the company or industry. You should probably feel good about your position and makes me feel good my hedge is still on.
Their first coffee test failed. Although there were indications of a new test, I haven't heard of anything recenly.
You asked me before for some of my long ideas which I posted. Did you watch what they did since then?
As to Netflix's streaming business, I did not consider that hype, no. I was long, which you can see if you look at my posts on this site. The difference is that Netflix was expanding into the future while CSTR is expanding into the past. At this point, NFLX is far too rich for my blood and CSTR is attempting to break into a market thatalready has tons of competition.
Your point about Netflix results is correct but the trend is still going digital. See the linked article below that shows physical rentals declining to VOD. The figures in this article are way out of date, so the current numbers are going to be much more important:
If NCR gives up their kiosk business, it would be a good signal that the DVD kiosk expansion cycle is done.
I simply don't put any value on hype. Instead, I place a low value on an overall shrinking addressable market that will eventually implode.
I'm the first one to admit that I've been wrong so far. There are dynamics with this stock right now that go way beyond the fundamentals of the business. Witness the plunge from 54 back to the day's close during the earnings call.
The easist path right now for this stock is most likely up. But being how wrong I've been, it wouldn't surprise me if it went the other way too.
On a long term basis, I still have no better short idea than this. The catalysts that are going to tank it are the following:
1) Market recognition of the move from physical to digital being much greater than predictions.
2) No one has keyed in on the significance of Netflix dropping 26% Y/Y on physical disks per sub.
3) Continued sub growth for NFLX.
4) Continued promotion by content owners of digital.
5) Slowing closure of B&M and the end of Redbox picking up the easy business from store closures.
6) Over-expansion of kiosks resulting in saturation of the market and SSS impact.
This is a perfect storm brewing and I predict that it will start to hit by the time Q2/11 rolls around.
It's more like the paid journalists who are long CSTR writing articles that quote the ridiculous Pachter!
Timewarp, you have been far more right than me. You insisted we were in early innings and it was especially smart your post about the short covering that recently occurred.
If you recall, I had agreed with you on earlier posts that there was a definite possibility of the type of runup that we're now having. For that reason, I managed to hedge myself out of the majority of loss and keep my powder dry.
On the digital front, I entirely disagree. They've had plenty of time to put together a deal. The position they are taking, along with Eric Wold and Adams Research, is that digital isn't that important. That's their stress in the first couple of pages in the "digital initiative" of the conf call presentation (see the written conf call presentation). I think they are dead wrong on that.
As to ultraviolet, I'm not sure you got my point. It's not important that they buy into or not. What was relevant was that they weren't sure about what it was (ultraviolet) and it demonstrated that they really don't have much clue as to what they can do digitally.
As to partnering, I fully expect them to eventually do something. Just as Gamestop is trying and Blockbuster tried. To think they will succeed, is to put a value on hype.
You may be entirely right that the short opportunity is a year off but my bet is that this sets up by the time they report Q2/11.
Netflix? I wouldn't short it yet. I think they are still early innings and until someone competes, I'm not interested.
I have kept an open mind throughout this. I have been saying for a while that a runup like this was quite possible.
But throughout, it has been the digital that I've hammered on. Am I the only one that saw through the sham they put on last night?
The essence of this thing is that ANYONE could conceivably start a digital program. Redbox could could also start making smart phones and tablets. But to give it a value and to think they can succeed is pure speculation, pie in the sky!
The market is still not getting the Coinstar story and is caught up in a euphoria. They are not focusing on the future worth of the stock.
Each quarter, Coinstar has done a wonderful job of managing results. In the three previous quarters, they countered any questions about results or the future by simultaneously issuing press releases (last quarter blu-ray and the one before naval bases/Schnucks, before that the Warner deal). This quarter's lack of digital plans was covered up by providing advance notice of 2011.
Their constant hesitation during the earnings call, each time they were asked about specifics for digital, demonstrated the lack of anything definitive. As I pointed out before, they had difficulty even getting what the ultraviolet inititive was. Those who believe they will actually compete in digital are just dreaming.
It's going to become easier and easier. Fact is that physical rentals are losing to VOD and digital. Redbox has stepped into the gap of massive store closing. Their momentum will be short lived.
Pachter recommending is reason to sell more than anything. See my postings about him. Do any cursory net search if you think it's just my opinion: