Media

Netflix Keeps Missing the Bull's-Eye


1. Rising programming costs
Higher fees for movies and TV shows are hurting. Netflix’s (NFLX) costs to acquire content in 2012 will rise to more than $2 billion from about $800 million, according to Wedbush Securities.
 
2. Angry customers
Due to an up-to-60 percent price increase and its now-scrapped plan to separate DVDs from streaming, more than 500,000 subscribers have already ditched their Netflix service.
 
3. Content churn
The Starz (LSTZA) cable channel will no longer allow Netflix to stream films it licenses from Walt Disney (DIS) and Sony Pictures (SNE). So Netflix is striking new deals with DreamWorks and other studios to keep subscribers.
 
4. Growing competition
Satellite operator Dish’s (DISH) new Blockbuster Movie Pass service pairs streaming with physical DVD access—just like Netflix. Hulu and deep-pocketed Amazon (AMZN) and Google (GOOG) are also streaming rivals.
 
5. The “bypass” threat
Paramount launched its blockbuster Transformers: Dark of the Moon directly from its own pay-to-stream website. If other studios follow suit, the need for middlemen like Netflix could be diminished.

Sherman is a reporter for Bloomberg News in New York.

Later, Baby
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Companies Mentioned

  • NFLX
    (Netflix Inc)
    • $353.5 USD
    • -19.40
    • -5.49%
Market data is delayed at least 15 minutes.
 
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