NEW YORK ( TheStreet) -- Reed Hastings uses plenty of smoke and mirrors to spin the Netflix (NFLX - Get Report) story positive. Hastings has a way about him which creates the false perception that Netflix sits in the driver's seat in a space populated by loads of new players and a still wildly successful old guard.One of Hastings' latest memes gobbled up and passed along to clients, CNBC anchors and the general public by Wall Street analysts: Netflix uses the treasure trove of viewing data it collects from its subscribers to make better-informed decisions on what type of content to license and produce. As per usual, Hastings' public perspective only tells part of the story.
In some cases, I argue that the analysis of these numbers exposes one of Netflix's inherent weaknesses: it cannot secure premium content if it continues to effectively give it away -- unlimited -- at its $7.99 per month price point. I'll relay two pieces of information to support this contention. First, the one that practically every analyst chose to ignore and somehow managed to spin positive. You have to go back to mid-2011 for this. Sony (SNE - Get Report) pulling its content from Netflix as part of the latter's deal with Starz. And Starz's subsequent move to not negotiate a new contract with Netflix. On its company blog, Netflix referred to the Sony thing as a "temporary removal." Not true. At the time, over on Seeking Alpha, I defended Netflix against the notion that it did not properly warn investors that something like the Sony move could take place. It did, quite clearly, in the risks section of its annual reports.