In economics, the difference between the short run and the long run is how long it takes for competitors to react to a disruption in an industry. Netflix, Inc. (NFLX) appears to be nearing the cusp of this change. For years, the company has grown through licensing content from other studios at a reasonable price while developing its own programming.
Having seen the success of streaming services, content providers are increasingly setting up their own services, looking to keep the value of streaming for themselves. CBS Corporation (CBS) is upping its game this fall in the U.S. with “Star Trek Discovery” (which forced Netflix to pay up for the overseas rights). The Walt Disney Company (DIS) has already announced plans to break with Netflix and set up its own streaming service over the next year or two. Fox has joined this trend by launching FX+ for its programming. (See also: Streaming Is Changing Everything About How Media Works.)
All of this suggests that Netflix could lose content to competitors and that it may have to pay more to source content, cutting into its profit margins, or develop more content on its own, which can pay off if a hit is developed but also carries increased risks if something flops.
Netflix looks vulnerable as it completes a double top and streaming suppliers become competitors. …read more
Read more here: Netflix Stock Completes Double Top
Category: NFLX, CBS, DIS