And while Netflix’s DVD rental business has thrived in part because of the company’s superior logistics, that competitive edge will not mean much in the world of digital distribution. Netflix is also entering a more crowded market that includes not only the likes of Apple and Amazon, but also MovieLink, CinemaNow and video-on-demand services offered by cable companies. Pitz, who has a sell recommendation on Netflix shares.
“But the company’s earnings are going to be more negatively impacted,” said Mr.
“There’s clearly a strong demand for watching movies,” said Brian Pitz, an analyst with Banc of America Securities. And the company said last year that the service would cost it about $40 million in 2007, an outlook that has not sat well with some investors. They are down more than 12 percent since Jan. Netflix shares dropped 6.3 percent on Friday to $22.71 after a JPMorgan Securities analyst downgraded the stock, citing increased competition. Illustration by The New York Timesīut having a second act to talk about is not likely to end questions about Netflix’s future. “Because DVD is not a hundred-year format, people wonder what will Netflix’s second act be.”Ĭredit. Hastings also said he understood why questions about his business kept coming up. “We’ve gotten used to it,” Netflix’s chief executive, Reed Hastings, said of the doomsday predictions. It was expected to end 2006 with 6.3 million subscribers and nearly $1 billion in revenue, or about 12 percent of the $8.4 billion annual DVD rental market. Meanwhile, none of the movie-downloading services have gained much traction with consumers, the notion of taking Internet video content to TV sets remains a work in progress, and Netflix keeps signing up new customers at a fast clip. The impending death of the company, with its online system for renting DVDs delivered by mail, was predicted late in 2002, when Wal-Mart said it would enter the business again last year, when Apple and Amazon announced movie-downloading services and again last week, after the introduction of a series of products and services intended to bring Internet video to television sets.īut Wal-Mart left the online rental business in 2005 and now refers customers to Netflix. Someone may want to add Netflix to that list. 15 - Wikipedia, the online encyclopedia, lists more than five dozen personalities whose obituaries were published prematurely.
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