Netflix - Company at a Cross Roads

Netflix, a stock market and media darling, is a company at a cross roads.  Comcast recently announced live streaming to the ipad, a move that other cable providers are sure to follow.  Consider the following:

1. Netflix doesn't control the device

With the emergence of smatphones and tablets (and one heavyweight contender in Apple), Netflix does not control the platform for the viewing experience. Users are not tied to a "netflix" tablet, TV, or PC that they must watch content on.  They haven't created the "ecosystem convenience" that you can point to with the Kindle or Apple.

2. They are quickly losing control of the distribution

With Comcast & other cable operaters getting more sophisticated in their delivery mechanisms, Netflix will have greater challenges from these providers that have an established foothold in the home.  This landscape gets more complicated with content creaters wanting to get in the game (in 5 years, would anyone be surprised if a movie was directly streamed to TV via the Internet by the production studio themselves?).  To add to this complexity, you have app stores becoming the defacto way in which consumers source content for their devices.

3.  Netflix's key intellectual advance -- a fantastic distribution system -- may be rendered obsolete

And this is the biggest threat.  Their key breakthrough, in the form of a one-of-a-kind DVD distribution system, may soon be obsolete as users move away from the DVD form in its entirety.  In 5 years, the DVD may go the way of the VHS tape, which leaves Netflix with a great solution in search of a problem.

I think this company is in big trouble.  They may end up as pure algorithm company - one that licenses their unique 'recommendation engine' to the mix of parties above.  Look for interesting upheavels in this industry over the next few years.

Aveek Guha,

President, www.mbadaycamp.com

Comments

[wholesale electronics]

The information you provide must for some people is very important, I am also very interested in this content, thank you! I've always been concerned about your article, the content of this course, I may have different views, but the information you provide is very helpful for me, I always support you, yes, I have been doing.20110129pilipalagaga