Much scarier for Netflix is the challenge of securing rights to high-quality content for the long haul. This current stock crash is a blip, and their vision of transforming their focus to streaming is brilliant, but it will only matter if they can secure content people want to watch. From the looks of their current negotiations with Starz that will only get harder. The good news for them is that it won't be any easier for competitors to get those rights at a reasonable price. Long term, either the studios build their own infrastructure to stream to the masses or they license someone to do it for them. Guess who is positioning themselves for that role? It may be a bumpy ride, but I wouldn't bet against Netflix.
"The good news for them is that it won't be any easier for competitors to get those rights at a reasonable price"
I'm not sure this is true. When you look at a company like Amazon or Walmart they have a lot of power to negotiate with that Netflix doesn't. Premium placement of a Studio's new products for example.
Studios make most of their money off the new items and very little off the older ones. Netflix exclusively sells the older items where as companies like Walmart and Amazon control the main distribution models for the newer items. That gives them a lot of power over the studios and a much better bargaining position.
This actually helps Netflix too. The last thing the studios want is to be held hostage by one or two major players that control all the distribution channels and can act as a choke point. Worst case, a viable Netflix gives the studios leverage when negotiating with Amazon & Walmart. Unless you see a reason that this will be a winner-take-all market, the studios need Netflix as much as Netflix needs them. Particularly because of the leverage of the other players that you mention. No?
I agree with the logic of your statement but I'm not sure it will work out that way. I've never understood why the studios didn't do more to help iTunes competitors.
I'm not well aware of any iTunes competitor with the number of paying customers apple has or had when iTunes first came out - I'm guessing they just went where the money was.
