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  • Netflix Might Pull A GoPro This Year  [View article]
    I hope seriously that the author is right on the stock because I would love an opportunity to increase my net long. his assessment of the fundamentals in the media market cant be any closer than inane. the content producers are deathly afraid of power of Netflix. Netflix is the highest payer and that's because it has distribution strength to monetize. Serialized drama traditionally was an initial net investment position for the producers and studios and historically have been paid 70% by the first-run broadcast rights by the networks. The content owner than tried to distribute rest of world to a la carte and eventually make profit with back-season rights. Netflix is bidding upwards to 120% of production costs up front for global rights which changes the financial business model for content creators. Furthermore the SVOD on-demand audience that Netflix can deliver is much higher probability of successful realization of the content's targeted audience as opposed to traditional linear broadcasting that relied upon delivering an audience at a specific time to achieve the ratings necessary to sell the ad inventory. The fundamental disruption that is going on is the development of content designed not for an advertising-supported model but the flexibility for artists to develop a richer and more nuance story arc. Why do you think some of the most compelling adult drama historically have been on HBO for example because that was a venue that did not depend upon hitting an audience by the third episode or otherwise losing the opportunity for renewal. More than 70% of new broadcast shows don't last to the 3rd season.

    There is massive disruption that is going on right now in content creation and distribution, In fact television is the new "hot" venue because it gives creators the greatest creative license, A 13-episode season is a 13 hour movie or a double trilogy, and gives you far more bang per hour of entertainment value relative to the cost of creation.

    Netflix is not a commodity distributor, it is a gatekeeper that is becoming a dominant programming network that has global reach (so it can pay more than anyone else because of its ability to distribute and monetize that content). Netflix's innovation is the fact that its CPGA for subscriber acquisition is only $15 or 1 1/2 months gross revenues. No one comes close to those customer acquisition economics in recurring revenue subscription businesses.
    Jan 18, 2016. 10:09 PM | Likes Like |Link to Comment
  • Netflix makes a run at $700 as stock split looms  [View news story]

    the old POTS, or wireline telephone, used to be like 92% penetrated of households with like 1.2 lines per household. Cable and broadcast television combined have massive penetration of households well over 90%+ for video entertainment

    Do you know what the penetration of cellular phones was in early 2014 as a PERCENTAGE of the POPULATION (not households) -- it was 103%, so now probably 105%+ -- that's correct over 100% of POPULATION (327 million mobile devices in early 2014)

    the point is that your math of a traditional household penetration based upon households that the wireline telephone and cable/sat industries use is quaint and archaic because video entertainment consumption will shift massively to personal entertainment consumption and the continued availability of bandwidth and various forms consumption devices that access the cloud anywhere anytime. The availability and ubiquity of bandwidth will drive massive shift in video consumption paradigm.

    So to answer your question what is ceiling on internet television penetration -- well over 100% of households because the consumption purchasing unit will be increasingly individual accounts (even if they are on family share plans to qualify for discounts). and the next question of what portion would subscribe to Netflix, given where it has aggregated exclusive content versus what other competitors offer or will likely to offer (certainly not the content that Netflix already has aggregated as EXCLUSIVE, such as Disney/Marvel/Lucas/Pi... Vista studio output and Netflix's originals), it's easy to see Netflix having over 80% of that because it has the largest content library and shifts from being a "premium channel" to become the new "basic".

    So over 100% of households penetration....easily because it will be measured as penetration of population as a revenue unit.
    Jul 30, 2015. 12:37 AM | 1 Like Like |Link to Comment
  • Netflix: The Countries That Matter  [View article]
    apple tv features netflix as the first default subscription streaming service and is a distributor of nerflix via iTunes and bills customers for their Netflix service via Apple ID
    Jun 19, 2015. 08:56 PM | 1 Like Like |Link to Comment
  • Alibaba to launch video streaming service  [View news story]
    okay, Biobat, barriers to entry is only low if you have defined "entry" to what correctly. My daughter can sell girls scout cookies outside a Safeway beccause it is not hard to ask the store manager to let you set up a card table out front. But I would have said that it would be very hard for my 8 yr old daughter to set up a cookie retail store (actually her mom's labor - same outcome) as there are high barriers to entry in specialty retail. But if you are defining that as having high barriers to a "successful" retailer, then I think everything (or many things) has low barriers to entry. You cna say that building an airplane has ahigh barrier, but I can buy a model airplane and build it in 4 hours, but then you say, well you meant building an airplane that is tens of thousand of pounds can load passengers and take-off and land successfulluy, and also FAA approved, and where some carrier will buy the airplane, tehn you are correct my model airplane would nto fulfil that criteria. But then depending upon definition, it could be a low barrier to entry (buildlig an airplane), but a high barrier to success (an airplane that cna fly passengers safely and which will be bought by airlines). I think the intend of the original trite commentrator, given the examples tha the cited, was one that actually thought some of the other offerings were competitively equivalent or even offerign tthe same service just because they had an "app".

    Nevertheless, I agree that when NBC launched the first television network in the US, there was nothing to prevent CBS and ABC to follow. But in those days, everyone had unqiue content (even if they looked like each other) as each network was programmed independently, and each was constrained by a singular channel time-slot since it wa schannel constrained. That's why we have a world with multiple channels, with different degrees of mass market appeal ("broadcast") versus speicalized content such as the Fishing Channel ("narrowcast") that focus on niche audiences, and both prosper within their defiend strategies. In a future world where, everything is on-demand and OTT (i.e. you have infinite channel slots) delivering to any conencted device, what I dont know is whether in that future world, is there some network effect where entertainment viewing/consumption/pr... has shifted that it shifts power to winner-take-all. For example, it is extermely hard for a new entrant to compete head-on with EBay's seller/bidder auction market (but the business model itself may b emature to a limited slice of eCommerce) -- however, that doens't prevent a Priceline to slice up the offering segments to find a differnent cut at it, or a specialized broker such as SubHub, or Fandango, to tkae different niches that eBay cant effectively compete.

    My only point is that I see tremendous head-start advantages and sccale advantages coming from Netflix locking up content, its pre-emptive hardware integration (the button placement), apps ubiquidity (even Amazon could not have launched its Fire set-top streaming box without supporting Netflix and Hulu out of the box). IT is just hard to see anyone catching up with the whole package. That doesnt mean that there wont be other business models that cant cut into Netflix's share of the pie, and they will undoubtedly screw up in the future, multiple times, but as a busienss enterprise given the scale whre they ar etoday and rapidly expanding on a pre-emptive basis, it is really hard to bet against that business model.
    Jun 15, 2015. 06:15 PM | Likes Like |Link to Comment
  • Alibaba to launch video streaming service  [View news story]
    no you are the one that is confused. I have 500 channels on my television but only one of them shows Game of Thrones (exclusive to HBO), and only one of them showed the NBA Finals (since that was exclusive to ABC for Broadcast only), or only one of them has Daredevil (the Marvel property that is exclusive on Netflix). Surely I acould have wathed TNT who is offering linear binging on Law & Order, or view current seasons of White Collar, which can only be found on USA Network. And Vudu, like Apple iTunes, Google Play, Samsung MEdia, or Amazon, or what is offered on every single cable pay-per-view system is a non-exclusvie pay per view and digital locker (for content you hav epurchase ddigitally or otherwise have purchaed in a DVD bundle with the mvoie industrry's Ultraviolet platform) -- unfortunately it is not a subscription streaming service.

    You are absolutely correct biobat, that there are thousands of outlets competing for eye-balls and entertainment attention (including a gazillion cat trick videos on YouTube), however, programming networks curate and program a selection of content to differentiate their networks. I actually subscribe to them all, or pretty much, all, because I have the disposable income that if they offer me something worthwhile that I cant get elsewhere, they offer me economic utility. So I have Netflix as the largest library, HBO to watch HBO programming, Hulu Plust (to get current season major network fare), Crackle to get bargain bin Sony content that is simply easier to look through since such tiny library, Amazon Prime (because I liekthe free shipping and it now offers some content that Netflix doesnt offer -- the originals are pretty low -brow, but so is the Biggest Loser on NBC), Watch ESPN, NBA Basketball, Watch TNT, Watch TBS, Apple iTunes, Vudu, Viki, and it is endless. But each network offers different utility -- some monetize my time/eyeballs in that it is ad supported, while others require subscription. TNT has largest NBA package, but I cant get the games or the teams that I specifically want without subscribing to NBA. OF course I cant find NBA games on Hulu (even though it is owned by the broadcast networks) or Netwflix or HBO. I get to see boxing and NFL's HArd Knocks on HBO, but not anywhere else. These are programming networks, that do what programmers are supposed to do -- they pick programs to offer on their networks. That's why they spend gazillion dollars on licensing content. That is a huge barrier to entry. If you dont get that, then go ahead and short away. Biobat has been around since the stock was 1/5 of where it i swith the same argument. I dont disagree that from a valuation standpoint NFLX is ahead of itself (and I am now totally hedged myself) but it isnt because Netflix or HBO is going to be killed by "low barriers to entry', that's for sure.
    Jun 15, 2015. 02:41 PM | 1 Like Like |Link to Comment
  • Alibaba to launch video streaming service  [View news story]
    Apple TV is a skinny bundle with ala carte channel add-one. The number 1 and number 2 positions for add-on "premium" channels are Netflix and HBO Now. Before you go around sputtering gibberish about Apple TV, go out and buy the Apple box so you can get a feel for what you are talking about. I subscribe to Hulu Plus through my Apple ID account because it is easier. I can choose the same for Netflix and HBO Now,... but no Amazon Prime
    Jun 14, 2015. 04:48 PM | 2 Likes Like |Link to Comment
  • Alibaba to launch video streaming service  [View news story]
    "Low barrier to entry". Guffaw. What planet are you from? $4B a year in content spend before your first $8/mo customer. The barriers to entry are insane. Not the least of which huge swaths of programming are ALREADY locked up under "EXCLUSIVE" licensing arrangements. Go to the dictionary to read what "exclusive" means. I don't underestimate Baba, as I own its shares too, but Viki's ad-supported biz model and non-exclusive content is more at risk than NFLX . Reality is that all will succeed. Oh you didn't know who Viki is? Why don't you download the app and do a tiny bit of due diligence before offering your brilliant insight about "low barriers to entry" and other nuggets of wisdom.
    Jun 14, 2015. 02:23 PM | 4 Likes Like |Link to Comment
  • Netflix makes a run at $700 as stock split looms  [View news story]
    Kind of funny, the telephone industry used to define its penetration as a function of households and were ticked pink when it got to 1.1 lines per household, thanks to teenagers and fax lines. Little did they know that the cellular industry would get to 110% of population because unit of consumption changed from a household sharing a black telephone to a personal communication and computing device. Today, because of the extension of mobile communications beyond simply voice, there are more connections than people. I have 2 cell phones (one for work and one personal), a connect iPad, 3 cars with a cellular connection each, and a security alarm that is connected wirelessly. Video entertainment is moving from a shared viewing experience to a personal and individualized experience. My young kids don't even watch TV; they consume video entertainment on demand on their iPads, watching Netflix, Hulu, and Disney on demand. In that new paradigm, subscribers, or revenue units whether on family plans or individual accounts, will easily surpass not only 100% of households but multiples of that number.
    Jun 10, 2015. 09:47 PM | 1 Like Like |Link to Comment
  • Apple Watch Is Making Luxury Watchmakers Uncomfortable  [View article]
    My wife has about 10 watches, including diamond encrusted Chopard on the high end, or a simple rose gold Cartier tank. But she has been playing with various "smart watches" including buying two versions of the Samsung gear (the first one a rose gold version). She is now convinced that she will buy the Apple Watch Sport and will have to turn in her Samsung Note 2 for an iPhone. she doesn't see the Apple Watch necessarily replacing her diamond Chopard, or her Blanc Pain, or Patek, but the point is that each "watch" offers different utility. She's not going to wear the Apple Sport at a black-tie event, nor would she wear her Cartier at the gym. So all Apple is doing is taking a cut of her overall watch budget (actually i wish that she actually had a budget).

    I have 3-4 watches that I wear regularly, and another 5 or so that i dont wear too much any more that just sit in the drawer. But most of my existing watches have similar utility, and i have no clue what the utility of the Apple Watch that I just ordered but I suspect greater than my existing watches (or at least different). I really dont see what the big deal is if technology changes -- it is supposed to, so that folks like me will go out and buy ANOTHER one, and I am certain that Apple will provide soem trade-in mechanism in order to sell the hand-me-down in some developing country as a refurbed model. The whole point of the iPhone success as a category is the enforced obsolescence so that it becomes a "recurring" purchase for Apple iPhone users (granted, subsidized by the carriers) -- that's how you are supposed to run a business.

    I have no clue how successful or even whether successful the Apple Watch will be; but it certainly wont fail because other jewelry watches dont think technology is a viable substitute-- who ever said it was supposed to be a substitute?
    Jun 1, 2015. 08:45 PM | 5 Likes Like |Link to Comment
  • Chinese smartphone sales fall in Q1; Apple's share jumps to 14.7%  [View news story]
    why do you think chinese govt has some nefarious designs against apple. 100% of all iPones are made in china (except.some final assmebly donein brazil for that market) and the vast majority of the components, including the semis, are also made in china. more importantly apple iPhones are exported from China and employ millions of chinese not only directly but also the who ecosystem of component manufacturers and logistics operations.

    so it is absolutely absurd to think of Apple as anything other than a Chinese manufacturer and export juggernaut.
    May 11, 2015. 08:54 PM | 4 Likes Like |Link to Comment
  • PIMCO High Income Fund: Sell This Overpriced CEF Before It's Too Late  [View article]
    The concept of "OMG it is at a premium to NAV" is analysis that is quite trite. PHK should sell at a premium to NAV (just not as high). The reason is that it has a $220M perpetual preferred in its cap structure that provides leverage at close to LIBOR -- that is not replicable in today's market, so the PHK shareholder is getting the benefit of the purchasing power of that instrument while paying near zero coupon on it. Having said that, the PHK trade is a carry-trade in that getting significant portion of its return by borrowing short while owning longer duration credits.

    This thing will blow up when short rates climb (if they ever will), or when it must reduce leverage (it uses repos in addition to the ARS prefs). The reason it has done well past 5 years is due to unprecedented monetary policy. I've been long the name for nearly all of that 5 years. Sold in October. Finding the right opportunity to go short. The minute it drops the dividend (and it must, once short rates start to climb) this thing will go down materially as investor confidence breaks. It may even get cheap enough again to go long again.
    Apr 18, 2015. 07:36 PM | Likes Like |Link to Comment
  • Netflix: My Key Earnings Takeaways  [View article]
    Stays, so you think that if you pay $50M for 13 episodes of Daredevil that got delivered from Disney this quarter that it should be expensed because it will never be viewed again from next quarter onwards and have zero future economic utility? You should go back to the accounting school or b-school you went to and get a refund. Comcast for the first 25 years of its existence never had free cash flow as it was either building more plant or buying more cable systems. You get confused by an investment that uses cash with the returns. The challenge in many businesses is finding reinvestment opportunities that will generate adequate returns. NFLX is more like a restaurant chain or retailer where the format works and will generate over 30% margins by yr 4, just a matter of opening new stores and funding the launch and initial cash trough. Frankly it's like shooting fish in a barrel given the competitive moat that NFLX is developing with its content portfolio and purchasing power.
    Apr 17, 2015. 08:37 AM | Likes Like |Link to Comment
  • Netflix: The Bear Thesis Is A House Of Cards  [View article]
    redstock, you obviously have huge conviction so you really should go all-in and put every last nickel you have to either short this stock or buy the longest-dated LEAP puts for Jan 2017. This sounds like that it will be one of the greatest ever short trades like Paulsen's sub-prime mortgage bet. Go for it!

    While I dont agree with you at all, i think it's important when you find such a high conviction bet as what you describe, you really should back-up the truck to play that card -- that's the only way to genreate sustained alpha.
    Apr 13, 2015. 12:21 PM | 1 Like Like |Link to Comment
  • Netflix: The Bear Thesis Is A House Of Cards  [View article]
    it seems always a constant refrain from those who neither know accounting nor finance it seems, "OMG look at the so-called off-balance sheet content commitments, and how are they ever able to pay for all of that off-balance sheet debt when they don't make any profit"

    Well maybe it's because all those "liabilities" are really expense commitments and are paid from revenues through the income statement. In fact the content "commitments" are over a 5 year time frame but represent only 3x current annual content expense, with such period content expenses expected to keep pace with revenue growth due to the new market launches before such growth rate in annual content expense tailing off in another couple of years. So there are plenty of revenues to pay for the content obligations and in fact still generate increasing contribution margin.

    I won't argue the issue of valuation because that is not a clear call either way (AMC Networks sells at the same 4x+ revenues but with nowhere near the growth opportunity) however the ones running around spelling doom and gloom about the content commitments just simply don't understand any programming network business or basic accounting.
    Apr 8, 2015. 09:25 PM | 3 Likes Like |Link to Comment
  • WSJ: Apple talking Web TV service for fall launch  [View news story]
    The difference is that AAPL isn't stealing the content like Aereo did and instead AAPL has negotiated licensing deals with the major networks. It will be a virtual MVPD with a base package as described and then supplemented by premium channels such as HBO Now, Netflix, Hulu, etc as "premium" channels.
    Mar 16, 2015. 10:29 PM | 3 Likes Like |Link to Comment