In terms of online movie streaming, the competition is starting to come on strong. The leader today is Netflix (NASDAQ: NFLX), which is growing extremely rapidly. The company has already started raising prices, especially for its DVD rentals which the company delivers by mail. They intend to reduce this segment of their business and use mainly streaming as the margins are higher. Netflix has some large competitors coming up from behind however. Apple (NASDAQ: AAPL) iTunes has an extremely large audience which is growing rapidly. Although Apple offers Netflix as a selection for movie titles, people need to pay more to access this service. Apple also offers movies and shows through iTunes that are separate from Netflix. Amazon (NASDAQ: AMZN) allows movies to be purchased and streamed online through its web site. As the number of Amazon customers grow and use the web site for all of their purchasing needs, movies will be easily accessible to these customers through Amazon. Other competition such as Hulu, which is shared by giants Disney (NYSE: DIS) and GE (NYSE: GE) has a wide selection of movies and shows that is backed by Disney.
In Further news Netflix was downgraded to a Sell today which sparked some investors to rethink their investment decision. The stock trades at a nosebleed PE ratio that does not take into effect the heavy competition on the way. The CEO of Time Warner, Jeff Bewkes, does not consider Netflix to be a threat to his business, just simply another competitor. He says Netflix is "a chimp" not the 800 pound gorilla. Only time will tell to see who is the victor in this intense battle.
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