Netflix: By-mail business to peak in five years - Top Stocks Blog - MSN Money
 
Search Top Stocks:

Netflix: By-mail business to peak in five years

Posted May 29 2008, 02:38 PM by Kim Peterson
Rating:
Filed under: , ,

Netflix CEO Reed Hastings expects the DVD-by-mail business to peak in five years. That's the main reason the company is focusing on set-top boxes that stream video directly to the TV set. Investors tread carefully: Hastings' comments are more evidence that this is a company in the middle of a huge transition to a riskier, more competitive future.

One growing threat to the company comes from Redbox, which offers $1 DVD rentals at kiosks in grocery stores and other locations and is a popular choice with this blog's commenters. Redbox is majority-owned by Coinstar and plans to file for an IPO soon. Netflix would be smart to partner with Redbox, offering customers another way to get movies between DVD mailings.

More worrisome for Netflix are the video-on-demand services that cable and satellite providers are building. And tech companies like Amazon, Apple and Microsoft are bulking up their movie downloading and streaming options. In fact, Amazon said yesterday it will launch video streaming soon.

And don't forget the original Netflix rival: Blockbuster. The video rental giant is ramping up marketing for its Total Access plan, which combines by-mail and in-store movie rentals. The threat is enough that a Thomas Weisel analyst downgraded Netflix's stock today to "market weight" from "overweight" and reduced his price target to $35 from $40. Netflix shares fell on the downgrade, and at last check were down nearly 3% to $30.33.

Related reading:

Netflix's hot new video player

Netflix lifts limits on streaming movies

$9 to rent an HD movie on demand? 

Netflix investors overreact, run for cover

Post office seeing red over Netflix envelopes

Back to Top Stocks Digg this | Email this | Link to this
Comments

 

The popularity of Redbox is seriously limited by simple logistics-- it can dispense one movie at a time. Walking by the long line of people waiting while somebody dithers at the machine does not make me any less happy with my netflix account.

Pete (Posted 05.30.08 10:56 AM) Report Abuse

The only thing Netflix needs to really do is put Closed Caption on its online watch now and also have it for the new set top box.They are leavingout millions of people that need Closed Caption...

SegaRolow (Posted 05.30.08 11:20 AM) Report Abuse

LOVE REDBOX, SO CONVIENENT AFTER YOU DO YOUR FOOD SHOPPING. SOMETIMES YOU HAVE TO WAIT A FEW DAYS TO GET A NEW RELEASE, BUT IT IS WORTH IT FOR THE $1.00 CHARGE.

KEEP LOADING IT WITH NEW MOVIES........

JAYNE (Posted 05.30.08 12:04 PM) Report Abuse

Netflix is good but what do you do inbetween movie shipments? I go to Redbox!

Joanne (Posted 05.30.08 12:18 PM) Report Abuse

I can't understand the popularity of Netflix.  All I ever got was broken and scratched and unplayable DVD's, surly and mean-sprited customer service....with no credit or extra DVD's made available for lost time.  It also seemed that the longer you have your subscription the longer it takes to get a DVD returned.

vega6981@yahoo.com (Posted 05.30.08 12:50 PM) Report Abuse

I think it will peak in less than 5 years. Netflix is taking a strong step by pushing out the set-top box. This may head off some of their On Demand competition. Quality of the streaming video will be a big factor. The set-top box is getting a lot of buzz right now in other discussion groups.

Jim W (Posted 06.01.08 10:51 AM) Report Abuse

NETFLIX with video games would be a hit!!

Dave (Posted 06.02.08 11:52 AM) Report Abuse

Dave:

http://www.gamefly.com/

Jim W (Posted 06.02.08 10:35 PM) Report Abuse

I know about Gamefly. I don't want an account at 2 sites. Netflix adding games and movies in UMD format would be awesome.

I have also been a member for over 3 years, I have no problems returning or getting movies. Also, I have only had issues with 2 or 3 movies (non-playable) during my membership. My customer service reps have always been nice and eager to help. I even had a short conversation with one rep about something totally unrelated to Netflix. Buying from Netflix is also easy, I get my purchased movies very fast.

I can't speak about RedBox because I have never used it. The closest Blockbuster to me is over an hour away. Renting from them would be impractical.

Eric (Posted 06.11.08 5:39 PM) Report Abuse

I love NetFlix.. I have the box for watching on TV and have had a few problems with disks. Ive never been in a hurry for fast returns.. so's if anything is wrong with a disk they always send another copy. I believe the future is streaming and also think it will eventually replace mail.

Jim Brooks (Posted 07.16.08 1:06 AM) Report Abuse

1 2 > Last

Send a Comment

Comments must be directly related to the blog entry. Comments with offensive language will be deleted. Your e-mail address won't be displayed.

(please, no HTML tags. Web addresses will be hyperlinked):