Redbox [owned by Coinstar (CSTR)] has been threatening to roll out a streaming service for quite a while now. Turns out that they've threatened to roll one out again. It seems to me that Amazon (AMZN) may beat Redbox to the punch. Hulu has swiped away the Criterion Collection from Netflix (NFLX) streaming. I, for one, am quite happy to see some competition for Netflix in this space. There has been so much bearish hype (can you even refer to bearish arguments as hype?) about all the streaming competition coming down the pike, that I'm actually a little eager to see someone stepping into the ring with Netflix.
Competition sharpens everyone's game. Netflix has been so far out in front (by the nature of being the only one on the field) that I'm a little worried about them getting soft at this point. I'm sure those of you that have read my recent articles are a little tired of me waxing poetic about my tenure at Netflix. However, I'm going to once again subject you to a little reminiscing.
Gather 'round the fire kiddies, while I tell you a couple of stories about when Walmart (WMT) and Blockbuster (BBI) wanted to rent DVDs through the mail. I remember how everyone thought that Netflix's lunch was going to get eaten. Panic in the streets, blood running in the scuppers, signs of the apocalypse everywhere! The quarterly meetings were somber gatherings. Everyone was dour. Barry would present the financial data for the last quarter. Joel in 2004 and then Steve in 2006 would present the consumer insight and PR story. Then, we'd get Reed's sermon. I wish I could remember or do justice to the specific themes he used in rallying everyone. The underlying message was clear, however: we were in control of our destiny and it was our game to lose. We were the innovators disrupting the established players and we had a huge head start at how to make DVDs by mail work economically and at scale.
Everyone came out of the meetings focused with pinpoint accuracy on what was important: think our way past the competition and execute on the plan. I was always inspired and confident coming out of those meetings. While I don't remember the specific words, I do remember the community and connectedness in that theater. I remember one team, all pulling in the same direction and running like hell to make sure that we got there first.
I'm excited by the prospect of competition for Netflix. I'm thrilled that someone is going to provide a huge obstacle to overcome. I know that those folks that are still at Netflix can do it. I know that they will do it. Could it be that losing Criterion is a leading indicator of Netflix losing it's edge? Could it be that the third time is the charm, and someone finally topples Netflix this time, be it Amazon or Redbox or Hulu? Sure, it could happen. I just know it will be a glorious fight, and that we'll all win as consumers of entertainment because the best service will survive. I also have a strong feeling that (if you'll forgive me for mangling Mark Twain), "the reports of Netflix's death are greatly exaggerated."
Additional disclosure: I have some covered calls written against some of my NFLX shares.