June 11, 2010
Shares of Netflix are up more than 3 times in value over the last year. Is there still upside for investors? I ask Fool contributor Tim Beyers.
Mac Greer: Is it too late to buy Netflix (Nasdaq: NFLX ) ?
Tim Beyers: No, absolutely not. I think the advent of HTML5, a new version of HTML, makes it much easier to propagate video, interact with content, and bring it into applications without installing a lot of stuff on your computer. You just use the scripts that exist in these applications. HTML5 is going to make it really easy to broadcast video via your browser. It's going to make it really easy to get video to lots of smart phone devices. And we know that Apple (Nasdaq: AAPL ) is embracing HTML5 and iPhone 4, and Netflix is already taking advantage of that. So it's very clear that because of HTML5, Apple, Google (Nasdaq: GOOG ) and other companies are getting behind this standard. Video is going to be in more places. And it's a massive opportunity for Netflix. With that kind of growth, I think we'll see a rush to platforms that handle video very well. And we already know that Netflix does this.
Mac Greer: And what's the biggest threat to Netflix?
Tim Beyers: I guess the studios would be the biggest threat. If they could come up with an alternative platform using HTML and HTML5 and partner with others to have their own delivery mechanism. I think they understand that they can only hang onto the DVD business for so long before they have to capitulate and come up with a web platform that makes sense. I think Netflix is that platform and ultimately they'll come to a deal because it's tough to build a platform on your own. It's costly. You have to do a lot of things to make e-commerce really work well, that Netflix has already completed. But if the studios get help figuring out a platform that makes sense and that's an alternative to Netflix, that would be a significant threat to the future of Netflix business.