Netflix Remaining Dominant Over the Next Few Years, Though Being Challenged by New Entrants in Overcrowded Market

Posted by Gianluigi Cuccureddu SMP in Writers on April 16, 2011  |  0 Comments More from this author  |    |  Follow Gianluigi Cuccureddu SMP on: Facebook | LinkedIn | Twitter |

That's the conclusion by Tuna Amobi, director and senior analyst of media and entertainment equity research at Standard & Poor’s, being quoted on FoxBusiness. Netflix controls 61% of movie streaming. Its largest competitor was Comcast’s video-on-demand, but that only accounted for 8%. Netflix surged  30% this year alone and a whopping 225% in the past 52 weeks and has pleased investors with its uncanny ability to strike deals with studios and attract more than 20 million subscribers.

A couple of weeks ago, Facebook entered the movie arena by offering blockbusters via its platform:

When the deal was first made public, Netflix shares dropped 6% in a sign investors were preparing for a potential duel between the two providers. But weeks later, after Time Warner and Facebook released another five big-name movies on their platform, investors yawned the news, sending Netflix’s stock surging more than 3% on its own streaming deals, including most recently a five-year deal with Viacom’s Paramount Picture for exclusive rights to first-run films in Canada.

Later on in the article this quote was mentioned and I think the perception this person has is incorrect:

“Netflix provides value for one thing: watching movies. They have this laser focus and don’t deviate from their plan,” Kaltschnee said. “Facebook is everything to everybody, and when you’re not doing something fully it’s very hard to do it right.”

Facebook has the laser focus as a Netflix does, namely the user at its core, exactly as Netflix does with watching movies, only the execution and approach is different. Watching movies is an activity, Facebook personifies the digital identity. If Facebook is up to the challenge, don't know, but with a valuation of $234 billion they can take up this challenge with the right people.

Tuna Amobi ends with:

Film companies have learned from the music industry’s past dependency on Apple, according to Amobi, and are striving to avoid a situation where they are similarly bogged down to Netflix.

“Netflix is by far the most dominant over-the-top video provider right now, it has hundreds of millions of dollars for content and that’s something studios cherish,” he said. “But over the long term, studios would rather have other providers to create more demand outlets. That can only help them.”

What do you think of the last quotation?