Nomura Securities on U.S. Telecom, Media and Internet: What's In Your Eco-system?
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Nomura Securities on U.S. Telecom, Media and Internet: What's In Your Eco-system?
Analyst, Michael Nathanson, said, "Only a few years ago, the media world was titillated by the notion that consumers would seek to cut their current video provider and switch to a steady diet of lower priced internet content. Ironically, Netflix (Nasdaq: NFLX), once seen as the bogeyman of traditional media owners, actually turned into everyone’s friend due to a steady stream of cashable checks. Given our belief that there are no free lunches in the world, the writers of online content checks will only write their checks if consumers are willing to watch this content."
Media owners and executives want another bidder to keep driving up content pricing and positive earnings revisions. The names often mentioned are all the ones you expect: Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), Google (Nasdaq: GOOG) and Amazon (Nasdaq: AMZN). Who is next? That is the question.
As our Amazon analysts Brian Nowak and Aram Rubinson have written it will be very expensive to challenge Netflix (and now Hulu) on building up a competitive set of streaming rights with no guaranteed success. We are not certain that spending on a 'me too' set of content rights will sway consumers to drop Netflix or Hulu and switch to Amazon. Again, time will tell.
From here, we continue to believe that the biggest media checks have been written and cashed, which leaves us with one less upside surprise drive in 2012. As always, it’s open to debate.
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Analyst, Michael Nathanson, said, "Only a few years ago, the media world was titillated by the notion that consumers would seek to cut their current video provider and switch to a steady diet of lower priced internet content. Ironically, Netflix (Nasdaq: NFLX), once seen as the bogeyman of traditional media owners, actually turned into everyone’s friend due to a steady stream of cashable checks. Given our belief that there are no free lunches in the world, the writers of online content checks will only write their checks if consumers are willing to watch this content."
Media owners and executives want another bidder to keep driving up content pricing and positive earnings revisions. The names often mentioned are all the ones you expect: Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), Google (Nasdaq: GOOG) and Amazon (Nasdaq: AMZN). Who is next? That is the question.
As our Amazon analysts Brian Nowak and Aram Rubinson have written it will be very expensive to challenge Netflix (and now Hulu) on building up a competitive set of streaming rights with no guaranteed success. We are not certain that spending on a 'me too' set of content rights will sway consumers to drop Netflix or Hulu and switch to Amazon. Again, time will tell.
From here, we continue to believe that the biggest media checks have been written and cashed, which leaves us with one less upside surprise drive in 2012. As always, it’s open to debate.
Discover Wall Street's best ratings calls with the pros - Ratings Insider Elite. Free Trial!
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