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Sunday, July 18, 2004

Netflummoxed

I'm a big fan of Netflix. I like the convenience of not having to make a trip to the video store. The subscription price is decent, averaging out to about a dollar per DVD. Their costomer service is great. Their selection is excellent. And best of all there are no late fees.

So I was happy to learn that Netflix' profits had nearly doubled last quarter. But then I see this article about Netflix' stock price plummeting. What's the deal? Apparently, expansion costs cut into all those profits. They're also facing competition from Blockbuster, Walmart and video-on-demand.

I don't really see Blockbuster as much of a threat right now since they're currently offering less for more. VOD I don't know about. VOD will probably offer better picture quality and more conveinence, but how much is it going to cost? And will it offer the same features as a DVD?

Walmart is Netflix' biggest threat at the moment. They rolled out their DVD subscription service not long after Netflix. Their subscription rate is a little less, plus they already have a distribution network in place. The one thing they have going against them though is that they're...well...Walmart.