NEW YORK ( TheStreet) -- In case you missed it, Amazon.com ( AMZN) stole the rights to "Downton Abbey" reruns from Netflix ( NFLX) 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".
Cost of sales was $16.14 billion, or 75.9% of revenue, compared with 79.3%. Fulfillment, marketing, technology and content in G&A combined was $4.45 billion, or 20.9% of sales, up approximately 293 basis points year-over-year. Fulfillment was $2.2 billion, or 10.3% of revenue compared with 9.3%. Tech and content was $1.22 billion, or 5.7% of revenue, compared with 4.5%. Marketing was $833 million, or 3.9% of revenue compared with 3.3%.We can argue all day about Amazon's strategy - you know I'm ultra-bullish on it -- but it's tough to make the case that Amazon could not, pretty much at will, stop Netflix in its tracks. Jeff Bezos has started a mini-bidding war on content. If he decides to kick things into high gear (you know, take a billion or so from fulfillment and put it towards content), it's lights out for Netflix. If another player in the space -- one with firepower -- gets serious about buying content, Netflix will likely struggle to stay in business. Two key thoughts: One, I know what you're thinking. Will Amazon buy Netflix? Based on everything I have said in this article, I'm not sure why it would. All Amazon would be doing is taking on billions in debt -- just a trashed balance sheet -- when all it needs to do is outbid Netflix for content that, for the most part, isn't exclusively licensed anyway.