This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Amazon vs. Netflix: Jeff Bezos Could Squash Reed Hastings Like a Bug

NEW YORK ( TheStreet) -- In case you missed it, Amazon.com (AMZN - Get Report) stole the rights to "Downton Abbey" reruns from Netflix (NFLX - Get Report) last week. In and of itself, this is not a big deal, but don't ignore the news. Reed Hastings isn't. And, if he is, quite frankly, he's foolhardy.

Hastings likes to make you believe his company operates from a position of strength. He uses all sorts of smoke and mirrors to do it, but, ultimately, Netflix cannot continue to finance its admirable content acquisition, original programming and international expansion efforts by refinancing and taking out debt.

It will catch up with the company. When it does, the business -- as powerful and impressive as it is as a consumer service -- will crash like (no pun intended) a "House of Cards".

I watched the first episode of "House of Cards" over the weekend. It's good enough that I will be back at some point this week or over the weekend for another episode or two. At this point, however, it's not what it needs to be for Netflix; it's not of HBO quality.

I'm no television critic, but it seems to me the people who produced "House of Cards" for Netflix are not masters of the art of weaving together a compelling storyline in an hour, yet making it believable. That's what HBO does so well.

But that's beside the point. Even if "House of Cards" kills it, Netflix needs to kill it again and again and yet again to even place itself in the same league as HBO. That's next to impossible.

If Netflix manages to accomplish this, there's no guarantee it will matter. You're still giving away all of your programming -- original or third-party -- at the bargain price of $8/month. When subscription fees comprise your only line of revenue in a business that burns cash like there's no tomorrow, things simply cannot end well without considerable and, quite possibly, unworkable structural change.

The existence of giants such as Amazon as streaming/on-demand middlemen -- not to mention Apple (AAPL - Get Report) and Google (GOOG - Get Report) -- makes things even more complicated. These guys have cash cows in place to subsidize something like an expensive streaming operation; Netflix absolutely does not.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $126.40 -0.16%
AMZN $437.71 0.07%
GOOG $523.00 0.22%
NFLX $658.30 0.43%
FB $87.27 0.41%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs