Nick Gogerty

Netflix Earnings Show Accelerating Move to Digital: Can Others Keep Apace?

NFLX is making the right move and going to where the puck will be not where it is. In 5 years digital distribution will be common and commodified with players embedded in everything and cable co's just playing the role of pipes in many situations. Buy offering a cheap bundle nflx reduces potential churn, spurns new entrants etc. and gets it. People don't care about download vs. dvd, they seek convenient cheap entertainment. NFLX is skating to where the pick is going to be. That being said the business will be just a commodified distribution business and shuffling bits doesn't have the same moat as physical dvd mailers. The customer base will grow, the ARPU and margins will shrink, potentially leaving them roughly where they are today as a company from a cash flow perspective. The value will got to customers courtesy the invisible hand of market competition.