I have no idea how this guy came up with this when it comes to NFLX. I guess he is looking at the company in very long terms like years from now.
"While we expect solid near-term performance, we remain concerned about the potential entry of near-term competition and the long-term impact of digital downloading alternatives," wrote analyst Jim Friedland in a research note
I think Blockbuster just can't compete since they were forced to raise prices recently back to parity with NFLX. I mean BBI is weighted down with their underperforming retail stores with their rents and staff while NFLX is more nimble in their business model. I don't see any competitors of note coming down the pike. By the time these phantom competitors get in place Netflix will have grabbed a solid market leadership in the space.
I also think downloads will only become popular only when networks get faster. Most DVDs are like 5 gigs or more and moving them through standard broadband takes a while. Also there is nothing in the world that stops Netflix from rolling out their own download service when networks eventually speed up. That would certainly save money on shipping costs and increase their margin.
I think this guy is reading too much into ITunes allowing certain TV shows to be sold online. Once HD-DVD and Blue-Ray take hold and start to increase the clarity and look of the DVD experience (and in turn the file size of the downloads) we won't have to worry about digital downloading for quite a while.
In fact I think the HD-DVD vs. Blue Ray mess may be a boon for Netflix. I would much rather accidentally get an incompatible DVD in the mail for my fixed price per month then have to pay $25 for it. You may see Netflix get more popular going forward.
No comments:
Post a Comment