Commentary

When Should You Start Worrying About Netflix -- And When Should You Stop?

A rocketing stock price for Netflix  -- up 14% in after-hours trading to just under $400 a share on Tuesday, just after releasing its Q4 2014 results--- must have rustled the feathers of traditional TV media companies, even if just a little bit.

Still, this is a new year, and those media companies aren’t taking this lying down. While many are racing to stake their subscription video-on-demand claims – often as stand-alone digital businesses like HBO Go or CBS All Access -- Netflix keeps grabbing headlines. Now reports focus on its strong Q4 earnings results, and the fact that it reached 57 million subscribers worldwide, 39 million in the U.S. and 18 million internationally.

But the debate continues: Is Netflix a content company? Is it a technology company? Original content such as “House of Cards” and “Orange is the New Black” are nice drivers for Netflix -- and this year it is doubling its number of original TV shows.

Traditional TV producers are hoping Netflix will lose steam and lack the wherewithal to continue to produce premium TV content. Also, with binge-viewing, its content gets digested at a faster rate by consumers, which ups the demand for fresh content.

Now throw in some caution. Analysts say the company growth goals have been very conservative. And on CNBC on Tuesday, analyst Neil Doshi, managing director of the CRT Capital Group, noted that competition from the likes of CBS, HBO, Dish Network’s Sling TV and Sony will put Netflix under much pressure this year.  

If you weren’t among any of those companies mentioned above, you’d better have a digital subscription VOD strategy going forward -- either that, or a much closer partnership with Netflix.

Running scared, running new digital businesses --or just running around? You’ll be in one of these camps.

2 comments about "When Should You Start Worrying About Netflix -- And When Should You Stop? ".
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  1. Douglas Ferguson from College of Charleston, January 21, 2015 at 7:07 p.m.

    Netflix could stumble, or fade. Nothing is forever. That applies to media giants like the alphabet networks, too. I think broadcast corporations are beyond mature businesses. Maybe they can reinvent themselves, but I think some investors view them as 20th century dinosaurs. Time will tell, but right now Netflix's future seems might rosy if it continues to pour money into products that compete with shows that have the distinct disadvantage, from the standpoint of younger audiences and old alike, of being littered with advertising. People put up with commercials for decades because they HAD to, not because they wanted to. Netflix has proven that!

  2. Paula Lynn from Who Else Unlimited, January 21, 2015 at 11:59 p.m.

    Comcast just raised their rates again....comment.

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