Is Spotify Stepping on Netflix's Toes?

Should a successful business work to become really good at what it already does, or should it expand its sphere of influence and try to take over something else? Here at the Fool, we believe that diversification can be a huge strength for a business. However, it largely depends on the situation. If a company has made a name for itself selling apples and wants to branch out into selling oranges, it needs to make sure it's got the financial resources to do both.

Streaming music company Spotify seems believe in the power of diversification: It recently announced that it would be expanding its horizons into the realm of video. It seems like a surprising move, particularly because Netflix (NASDAQ: NFLX  ) has set the bar pretty high when it comes to streaming video. But could the barrier to entry be lower than it looks for this market?

Fool contributor Caroline Bennett takes a closer look at the ins and outs of this situation. Is this the best course of action for Spotify? Should Netflix be worried? And even though it's a private company, can we still find out whether the streaming music service has the financial means to make this happen? 

Whether Netflix can fend off its burgeoning competition is a huge hot topic for investors, which is why The Motley Fool has released a premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. The report includes a full year of updates to cover critical new developments, so make sure to click here and claim a copy today.

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