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Can Netflix Stay Afloat?


It was just a matter of time before people started questioning their own logic of not using it. It no longer made sense to drive to a Blockbuster, stand in line, search through its entire collection, and then have to deal with late fees. Blockbuster, the once-hot spot for Friday nights, became old overnight. Netflix took over the market -- both the movie industry and Wall Street.

The Empires Strike Back

However, with such exceptional growth, comes a lot of attention. Netflix started to get a lot of it not only from Amazon (AMZN), which recently launched a competing service called Prime.

Also, members of the cable industry started to wonder about their own futures -- namely Time Warner (TWX) and Comcast (CMCSA).

The first evidence of this concern came when Time Warner's HBO unveiled its now-widely popular HBOGo Internet streaming service. Subscribers of HBO are now able to access all of its on-demand content online, free of charge. Though HBO says it has not plans of making this service available to non-subscribers, its ease of use as well as interface is arguably equal to or better than Netflix's.

Also showing some concern was Comcast. In February, the cable giant announced its plans to go toe-to-toe with Netflix with its own Internet movie streaming service called Xfinity Streampix, one that will offer a library of TV shows and movies.

As with HBO, the service will be made available only to its current subscribers. However, the difference is that unlike HBO, under programming agreements, Streampix can also operate as a standalone service outside of the cable subscription package.

As with RIM, Netflix is started to feel the pressure that comes with being a market leader.

The Netflix Channel

However, unlike RIM, it seems Netflix is willing to make the necessary adjustments. Where it can be argued RIM dominated the enterprise at the expense of sacrificing the wants and needs of consumers -- which ultimately led to Apple's dominance -- Netflix is demonstrating that it will leave no stone unturned to maintain its market share, even if it means sharing (literally).

In a stunning move, Netflix CEO Reed Hastings has decided to "think inside the box." The company has had discussions with some of the largest cable operators and appears to want the company to have its own channel on their cable offerings. The idea is that Netflix would become available as another on-demand option for cable subscribers through their set-top boxes.

Netflix essentially wants to pay cable companies just for the opportunity to compete with their own premium movie channels including Showtime, Starz and HBO. If this works, the cable companies would receive a subsidy for offering Netflix as an additional option added to a customer's cable bill.

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