It seems like the direction of streaming media is now moving to a studio based model. Each studio would like to create their own streaming service for their content, and reap all the benefits from that. We're seeing that affect Hulu's valuation as well. An aggregated video streaming service needs access to all that content, and the right's holders are less and less willing to negotiate that.

I think the long term is an aggregated model like Netflix, but they're going to have to weather some trying times as studios try to build their own streaming services first. At the end of the day, consumers want one place to go and get all that content. The studios want a bigger piece of the pie and are going to force everyone through some uncomfortable times before they learn their lesson. Ultimately consumers will foot the bill for all the failed experiments and will probably end with a service just like netflix at a higher cost.

I think the major problem here is that the studios are routinely forgetting that thye've never successfully managed full distribution. Never. There's always been another party which aggregated, whether it was movie theaters or stores.

Possibly, they think they can replicate television. But television was either free or 24 hour nichey-ness if it was really popular.

I agree. I think the strategy of the studios is doomed to fail, but I think Netflix and consumers will end up paying the price (through more expensive services, and less content). They absolutely hate that someone else is building a profitable business on their content. The studios, much like the recording business, is slow to react, and they didn't realize the value of streaming video until Netflix proved it was a viable business model. I see the studios throwing money at it, hoping to buy their way into a new source of revenue. That will only serve to fragment the market, and won't succeed in the long run. The big question for me is, does Netflix have the resources necessary to weather the time Studios spend experimenting with their own distribution?

The issue isn't really profit as much as it is marketshare.

The flawed assumption that people seem to be making is that Netflix will continue to dominate because it was first to market. But that isn't necessarily true. Netflix has to deal with several very viable competitors entering the market including Amazon who is essentially giving a streaming movie service away to entice people to sign up for Amazon Prime (Amazon has found Prime users buy far more than average users so it makes sense for them to incentivize those subscriptions)

It's easier to hang on to an existing customer then it is to acquire a new one. So the market wants to see Netflix hang on to its DVD customers because those customers will eventually go to streaming and will probably stick with Netflix to do it. When those customers leave Netflix's service it makes them up for grabs again.

That's the problem the market sees. They're looking down the road to a future where Netflix has 4 major streaming competitors (Blockbuster, Amazon, Walmart and RedBox with its discount $3.99 plan). So they want to see Netflix hanging on to its existing customers now.

Have you looked at the movies available to Prime members? It's like a roster of rejects from USA Up All Night.

Had an extra Sony BDP-S580 on hand this weekend so checked it out. After contemplating a Jenny McCarthy straight to video versus Clan of the Cave Bear, I had to switch to TV. Studio 60 on the Sunset Strip is great TV, but by itself doesn't make Amazon Instant Video a Netflix competitor.

Nice deck for $120 though, one of the few offering Hulu+.

I'm agreeing with your analysis in general. What do you think the odds are of Netflix dropping prices again in the face of competition as they did in 2004? That's certainly marketshare over profit. I presume they'd discount the hybrid customers which are precisely those members that are 'in transition'.

I don't think the odds are that great (though I think it's what I'd do in the same situation). I figure Netflix still thinks they have the right strategy and they've already taken the hit for the customer loss. So why not ride it out and see where it takes them.

Truth is they've probably earned a little arrogance in this arena. People questioned their streaming strategy at first and we all know how that worked out.