Netflix (NFLX) Looks to Avoid Pitfalls by Keeping Things Fresh
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With Netflix Inc. (NASDAQ: NFLX) a veritable runaway train over the last year, traders continue to pose the question: just how long will this ride last?
In 2010, Netflix controlled the lion's share of U.S. spending on physical video rentals with 34.8 percent of the market, up from 25.7 percent in 2009. This nearly doubled that of Blockbuster Inc., which has been decimated in the changing content distribution market. Fast-growing kiosk leader Redbox, operated by Coinstar Inc. (Nasdaq: CSTR), held 18.9 percent of market.
After seeing what happened to Blockbuster following its refusal to change with the times, Netflix has decided to cut out the middle man and start producing original content -- certainly no Mickey Mouse production.
"House of Cards" will be a 26-episode series directed by the Academy Award nominated David Fincher, behind last year's hit "The Social Network."
"By possessing original content, Netflix could be in the same league with cable TV rivals like HBO and Showtime for attracting and driving audiences to its services," Tim Westcott and Michael Arrington, senior analysts covering television and U.S. video respectively at IHS, said.
The move has not been well received by studios, with several already planning to pull content from Netflix now that the service is seen as a more viable threat to cable networks. Showtime and Starz have already announced plans to cut content offered through Netflix, while HBO has never been on board.
Shares of Netflix are down 1.9 percent to $239.70 Wednesday.
In 2010, Netflix controlled the lion's share of U.S. spending on physical video rentals with 34.8 percent of the market, up from 25.7 percent in 2009. This nearly doubled that of Blockbuster Inc., which has been decimated in the changing content distribution market. Fast-growing kiosk leader Redbox, operated by Coinstar Inc. (Nasdaq: CSTR), held 18.9 percent of market.
After seeing what happened to Blockbuster following its refusal to change with the times, Netflix has decided to cut out the middle man and start producing original content -- certainly no Mickey Mouse production.
"House of Cards" will be a 26-episode series directed by the Academy Award nominated David Fincher, behind last year's hit "The Social Network."
"By possessing original content, Netflix could be in the same league with cable TV rivals like HBO and Showtime for attracting and driving audiences to its services," Tim Westcott and Michael Arrington, senior analysts covering television and U.S. video respectively at IHS, said.
The move has not been well received by studios, with several already planning to pull content from Netflix now that the service is seen as a more viable threat to cable networks. Showtime and Starz have already announced plans to cut content offered through Netflix, while HBO has never been on board.
Shares of Netflix are down 1.9 percent to $239.70 Wednesday.
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