Wall_St_Geek

Coinstar and Netflix: Two Shorts on Movie Rentals

I also think the NFLX is due for a correction, but not for the reasons you state. NFLX's plans are roughly equally profitable regardless of the X-out status due to corresponding usage, so if subscribers reduce their plans due to discretionary spending cutbacks, their earnings should remain intact. While some may cancel all together, NFLX actually saw strong sub adds in the last quarter, as people moved away from dining out, going out, to home entertainment. I believe this trend will continue.

With regards to the online competition, your comment....

"Their moat will disappear quickly, as giants such as Amazon (AMZN), Apple (AAPL), Hulu and Blockbuster move into the arena"

...is a a little off-base. First, each of these players are ALREADY in this space, and in the case of AMZN and AAPL, have been for some time. This has not slowed the growth in NFLX. These other players still have to work out a decent revenue / pricing model. As a NFLX sub, I get free access to the online content with my sub, rather than paying / view with the others.

Having said that, I think that growth will slow due to less "new" subscribers, and that a miss on topline revenue may be waiting, as people reduce their plans. IMO, this will cause the correction.