Netflix, Inc. NFLX.q may not seem like a monopoly since it has many competitors. The “monopoly in the making” is in the streaming and mail rental business.
Netflix is expected to have more than 19 million subscribers at the end of 2010. Its growth may explode in the coming years Back in April, Trefis Research predicted that it would eventually reach as many as 47 million subscribers. That represents 39% of US households with DVD players. Where Netflix wins is with its library of more than 20,000 titles and its flexible business model that accommodates streaming or DVD by mail.
To be sure, many companies do what Netflix does. Hulu is available for online TV and now movies. Coinstar Inc. CSTR.q its Redbox rental kiosks and is expanding online. Cable companies also offer video on demand for a fee though they have many free offerings as well. Amazon and iTunes offer downloads of movies and television shows. Vudu is another competitor, but its movie library has yet to approach a critical mass even though it claims to be the HD king
Netflix’s biggest risk is the movie studios. Now that they have figured out how to win in the digital world where piracy is rampant, having access to the company’s distribution network will be far more cost-effective than dealing with smaller upstarts. It seems that the biggest challenge for Netflix may be staying an independent company.
Netflix is expected to have more than 19 million subscribers at the end of 2010. Its growth may explode in the coming years Back in April, Trefis Research predicted that it would eventually reach as many as 47 million subscribers. That represents 39% of US households with DVD players. Where Netflix wins is with its library of more than 20,000 titles and its flexible business model that accommodates streaming or DVD by mail.
To be sure, many companies do what Netflix does. Hulu is available for online TV and now movies. Coinstar Inc. CSTR.q its Redbox rental kiosks and is expanding online. Cable companies also offer video on demand for a fee though they have many free offerings as well. Amazon and iTunes offer downloads of movies and television shows. Vudu is another competitor, but its movie library has yet to approach a critical mass even though it claims to be the HD king
Netflix’s biggest risk is the movie studios. Now that they have figured out how to win in the digital world where piracy is rampant, having access to the company’s distribution network will be far more cost-effective than dealing with smaller upstarts. It seems that the biggest challenge for Netflix may be staying an independent company.
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