Netflix and the future of streaming

As I’m sure many of you have heard, Netflix stock has been plummeting since this summer’s Qwikster fiasco. The stock is currently trading in the mid-70’s and less than four months ago it was at a record high of about $300. Ouch. I would be surprised if the stock ever got that high again and I think the golden days of Netflix are in the rear view mirror. I’m not saying this because I think Netflix is doomed or anything that extreme, but the world of streaming premium content is changing and I don’t think Netflix will be able to attain such a lofty spot again amidst increased competition and costs.

At least one analyst, Michael Pachter, has predicted that the cost for Netflix to license content to stream could increase by a factor of ten as their current contracts with studios come up for renegotiation. Back when Netflix first started streaming it was a more experimental time but now it’s abundantly clear that streaming is going places.

On the competition front, Amazon is aggressively growing its streaming library and with the release of Kindle Fire is hopping to give customers a mobile, direct connection to a library of books, music, movies and TV shows. Hulu, even though its parent companies seem not entirely sure what do with it, is still the poster child for monetizing premium streaming content via ad revenue. The Hulu+ service also recently hit the 1 million subscriber mark, but that is still tiny compared to the nearly 24 million subscribers Netflix has. Finally, there is Apple and its AppleTV plus iTunes Store combination. Although the AppleTV has only attained ‘hobby’ status within the company this wouldn’t be the first time Apple came out of nowhere to steal the spot light.

If the old adage of competition being good for the customer holds true then the next few years stand to be pretty exciting ones for video streaming customers.

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