Android Phone Tips
|Android Phone Tips|
Suddenly, it hits you that the only time your attire would've been a hit was the night before. Now the cable television industry and DVD manufacturers are having a collective "Aw (expletive)" moment with the success of Netflix's online streaming service.
Netflix's triumph with mailing DVDs to subscribers who pay a monthly fee had already devastated video rental stores. The streaming option is working so well that Netflix may one day cut out its DVD mailing service and work entirely through streaming.
That's not to mention that the company is so flush with new subscribers that it had the cash to offer an original series called "House of Cards" created by actor Kevin Spacey and director David Fincher, and was able to buy exclusive rights to rerun the popular "Mad Men" series.
Showtime, which had agreements to supply Netflix with certain shows has yanked all but two seasons of "Dexter" and has announced that it will start its own streaming service as part of its cable subscriber package. Movie studios also have become concerned. If Netflix gets a film too early it could cut into their profits from DVDs and cable TV licensing sales.
While I have mentioned the costs associated with international expansion as another bearish driver, I have yet to look closely at Netflix's only international foray thus far - Canada. Overall, Netflix anticipates an international operating loss of between $50 million and $70 million in the second half of 2011. If you look at what Netflix expects from Canada in Q2, it's tough to get excited. On the high end, Netflix will experience 250,000 net subscriber additions. Netflix expects its international loss to expand to between -$14 million and -$10 million. Also in its shareholder letter, Netflix had the following to say about international expansion beyond Canada.
In Q2, we will continue to increase our content spending in Canada and begin to incur some small expenses for our second international market, both of which are reflected in our guidance for international operating loss. Remember, in Canada Netflix saw net subscriber additions decline and its loss widen between Q4 2010 and Q1 2011.
Skepticism aside, let's assume Netflix does turn a profit in Canada in Q3 and breaks even there in Q4. In this optimistic scenario, that makes Netflix's entire $50 to $70 million Q3/Q4 2011 operating loss attributable to expenses connected with expansion into its second international market. We’ve also decided to make some early content commitments for a third international market given our high probability of success in our second international market.
Let's try to follow Netflix's rose-colored pronouncements again. Netflix is spending money on its third international market now on the basis of expected success in international market number two, which will lose between $50 and $70 million in Q3 and Q4, 2011. It will follow these losses up with international market number three early in 2012. For weeks, I have riffed about Amazon.com (AMZN) making a play for Netflix.
Just as the more-than-plausible scenario that Amazon.com or another big name could take Netflix out makes me rethink my NFLX short tendency; the idea that Amazon.com might not actually have big enough things up its sleeve for Prime streaming triggers long hesitation there.
When you think about it, contemplating a Netflix-Amazon hookup is much more than baseless speculation. As the Journal article noted, buying Netflix gives Amazon 20 million new customers, many of whom will impact the bottom line in areas other than video streaming. A Netflix/Amazon union could produce sheer insanity on the street; in fact. It would also save me from having to answer the critics if Netflix carries out its international expansion as it says it will.
By. Android Phone Tips