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Online DVD rental company Netflix Inc. has "little to worry about" from Hulu's $10-per-month subscription service, says Morgan Keegan analyst Justin T. Patterson.
THE OPINION: Hulu announced the service, Hulu Plus, on Tuesday, and in a surprise move said it will continue to show ads on the TV shows available to subscribers. Patterson said Netflix has an advantage because it offers far more content -- DVDs by mail as well as streaming movies, not just TV shows -- and its entry level plan is still a dollar cheaper than Hulu.
Netflix also streams on more devices, such as gaming consoles and Web-connected TV sets. Worst case, says Patterson, is that Netflix and Hulu will complement each other and give people a strong reason to "cut the TV chord."
THE STOCK: Shares of Netflix fell $1.06 to $111.52 in afternoon trading. The stock has more than doubled its value year-to-date. Hulu is jointly owned by News Corp., NBC Universal, The Walt Disney Co. and Providence Equity Partners.