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Technology Stocks : Netflix (NFLX) and the Streaming Wars -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (59)	9/29/2003 7:50:15 AM
From: Sam Citron	Respond to of 2280

1) in June Netflix, whose share price has more than doubled since it went public in 2002, won a patent covering much of its business model I didn't know you could get a valid patent on a business model, but if Netflix did, then what are their lawyers waiting for --an escalation of potential damage claims or a determination of how the likely protracted litigation is going to affect their profitability? 2) Netflix also faces a more powerful if more distant challenge: the likelihood that DVD's will in the future no longer be the medium of choice for home entertainment and that customers will instead watch films that they download to their computers and television sets. Copyright issues will continue to impede movie sharing and swapping on the net, but the 4.7 GB DVD will certainly be replaced in 3 or 4 years with the 27 GB blu-ray disk. Will NFLX capitalize on this development or might it hurt them? 3) "Talk to Her" ... was rented more often in its first six months on NetFlix than "Daredevil" the box office hit with Ben Affleck that received much less positive reviews on the site. Wal-Mart, with a different demographic audience and lacking the large database of previous customer ratings to mine, says that "Daredevil" is doing about seven times as well as "Talk to Her" in its online rental program. Idea for Walmart: Give Sam's Club members free DVD rentals if they return the DVD into a Walmart or Sam's Club store in order to encourage foot traffic. Also use indie DVDs to gradually get more upscale customers into the stores. 4. Wal-Mart is still working out the kinks. Of the five movies it chose to promote on its online DVD rental home page recently, for example, three required a wait of more than two weeks and one required a wait of more than a month. All of those films were immediately available at Netflix. This is inexcusable. Blockbuster used to have this problem. It solved it by giving the studios a % of rental revenues instead of a flat purchase fee. This gave the studios an incentive to keep Blockbuster well stocked in new releases. 5) How could Walmart gain an advantage over NFLX by using RFID?