I write about the Chinese and Indian movie industries. Full Bio «
I’ve been doing business in China since 1987, where I have produced movies and TV and advised major Chinese companies like China Film Group, Shanghai Media Group and CCTV. I've also been entertainment and non-entertainment companies alike for more than 25 years in finance, strategy, growth and market entry strategies for China. I am an award-winning screenwriter, and a producer of several independent feature films. I'm a graduate of Harvard University and earned an MBA degree at the Wharton School of Business.
I would not underestimate AMZN. If NFLX is going to have 30 - 40 percent margins as the market thinks, AMZN will undercut the price and will be satisified with 5% margin after building their library to the size of NFLX. AMZN is well on it's way to having a library the size of NFLX. NFLX is the leader at this time, but AMZN will not be satisfied with second place.
It is possible that Amazon will open up their streaming service to non-prime members. Since prime members pay $8 per month for streaming and unlimited free delivery, then they would probably charge only $4 per month for streaming only. I don't think AMZN is just going to watch NFLX take more and more market share without fighting back. AMZN is serious about their streaming business, they recently outbid NFLX for a British car show. We know how AMZN does business, they are willing to suffer with low margins for a long time in order to grow revenues, and they are cash flow positive from their overall business, with AWS showing a lot of strength. AMZN is building it's streaming library rapidly, so it shows they are in the streaming business for the long term, and they will not be happy to be second to NFLX. I think Carl Icahn may be right when he recently became concerned about increased competition, I think the only real competition NFLX has in the short term is AMZN, and AMZN does have the ability to undercut prices in a big way in order to win market share.
Do you know if the company has a share buyback in place ?. I did not think the stock would go this low. They seemed to have gotten a good price for the sale to the Teachers Pension Plan. Now they have $5 billion in cash and no need to cut the dividend.I would like to know what the net asset value for this company is , and if another company would buyout CVE.