Kudos to Netflix. Management is using their heads.
Wired has a must read article on Netflix . Here is the MEAT if you are too lazy:
You know, Netflix. In the last seven years, the company has amassed 5 million subscribers and now mails 7 million DVD rentals each week. Along the way, it drew Blockbuster and other chains into the online rental market and eventually persuaded Wal-Mart to drop its rival service and become a partner. But that’s only one side of Netflix. The company also has quietly become the exclusive distributor of more than 100 indie films, and it’s even starting to produce original movies. Netflix will make The Puffy Chair available to its subscribers, and it helped the Duplass brothers get a nonexclusive DVD distribution deal so the movie will be offered at Blockbuster and other rental chains, too. The company even teamed with Roadside Attractions to fund a theatrical release.
As a stock trader it reminds me why SHORTING STOCKS is so difficult. Unless there is financial fraud and wreckelss management, betting against public companies is difficult.
If I cared about the potential of this business model, there would be a price at which NetFlix would be appealing to me. In lieu of caring, staying short the stock as NetFlix aggressively pursues this model could be harful to your financial health. Why? Because there is great upside from this strategy and their powerful customer base.
Well done Netflix. YouTube could learn a thing or two from case studies like this.
PS – If you are an entrepreneur or like shorting stocks – don’t be lazy. READ THE ARTICLE !