Monday, October 24, 2011

The Most Important Issue Ever

I know it isn't, but I remain fixated on it. Netflix has a near monopoly which anyone else would find it difficult to take away on not only DVD rentals by mail, but DVD rentals period. They also have a side business in streaming video. The former is a bit of a problem because round trip for a DVD costs them a buck or so. The latter is a bit of a problem because their library is small, doesn't include many new releases, not everybody has broadband access, those who do have access are dealing with bandwidth caps, and it will endlessly be subject to competition from other firms and uncertain negotiations with the content providers. The point is even if the DVD-by-mail business is destined to have relatively small margins and, perhaps, to disappear completely some day , the streaming video industry is destined to have endless competition and poor negotiating positions. The best chance to gain a strong foothold in streaming is to tie it to your monopoly, not to separate it.