It may be happening slowly but people are gradually moving away from physical media to digital media. In terms of video, Netflix is in a great position, and could be an acquisition target. However, it still needs Hollywood to play ball or it’s game over for the whole venture.
Netflix The Player
has, partly by accident and partly by design, put itself in a great position to be the premier choice for video streaming.
Its core business is still DVD rentals by-mail, but its ‘Watch Instantly’ feature, which started as nothing more than an additional draw for would-be subscribers, could provide an assured future for the company.
Indeed, it could make the company an attractive acquisition target for big players such as Google and Amazon over the next few years.
Watch Instantly
Netflix’ ‘Watch Instantly’ is available on a range of devices, from the computer, obviously, to games consoles such as the PS3 and Xbox 360, the Roku box, and TVs and Blu-ray players.
Netflix has already started to push the streaming side of its business more strongly, and subscriptions that offer streaming only, with the DVD-by-mail option removed, could be close to reality.
Acquisition Target
According to Video Business, this makes Netflix a possible acquisition target. With a growing customer base (up 28 percent over the past year) and an impressive customer retention rate, both Google and Amazon could come sniffing around.
In a note to investors recently, Susquehanna Financial Group analyst Marianne Wolk wrote:
“Netflix has a video offering that users love. We see a multi-year window of opportunity for Netflix to build a larger, more significant presence in the digital video market.”
Hollywood Spanner(s)
There is one possible spanner in the works. For Netflix to truly become a streaming video behemoth it’s reliant on consistently fresh content from Hollywood movie studios. And that is far from assured.
Netflix Chief Content Officer Ted Sarandos told Bloomberg:
“We have to fight against their fear that we’ll destroy the ecosystem. We’re not destroying anything. We’re creating a new opportunity.”
This is patently true, because whether the major movie studios like it or not the world is going digital. If it fails to embrace those companies making businesses from streaming then it only opens the door for piracy to reign supreme instead. And then it won’t see a penny.
