It's easy to argue that Netflix
Yet, will Netflix be relevant tomorrow? That is the question that has kept the company's short position unusually high and sparked debate over whether the shares are overvalued, undervalued, or priced just right. Video on demand, which could very well make the physical delivery of DVDs obsolete, has always been a theoretical gray cloud.
Right now, video on demand appears laughable. Even broadband connections make quality video downloads a lengthy process, and it remains to be seen how the product will serve up the extra features, Easter eggs, and viewing options of the conventional disc.
Those that have been the most aggressive -- like the five major movie studios, including Sony
No, the success of video on demand will ultimately be dictated by the ability of cable and satellite television providers to make it viable. Yes, pay-per-view has been around for ages, but we'd have to be talking about much wider libraries with more flexible viewing features to make it a worthy Netflix alternative.
Maybe the next Netflix will be, well, Netflix. In an interview with Reuters over the weekend, CEO Reed Hastings again reiterated his desire to be a part of video on demand. While Hastings has made that position known since the company went public two years ago, this time he released a 2005 target for Netflix to make its entry.
The idea sounds promising for Netflix because it now has to take a hit on mailing the rented discs both ways as well as dealing with physical inventory and the buildout of its distribution centers. Netflix has an advantage in that its nearly 2 million subscribers are seen as the early adopters and the ideal target for a more flexible and user-friendly version of video on demand.
How the company fares in its efforts remains to be seen. However, an adamant company bent on assuring that it won't be locked into obsolescence has a funny way of making those gray clouds turn a puffier shade of white.
Longtime Fool contributor Rick Munarriz singled out Netflix in the Oct. 2002 edition of TMF Select, which evolved into Tom Gardner'sMotley Fool's Hidden Gems. It was a memorable call given the fact that the stock was bottoming out at a split-adjusted $5.45 a share at the time. Yes, Rick has been a Netflix customer -- and shareholder -- since 2002.