My esteemed colleague Rick Munarriz's concerns are certainly logical ones. However, I still think that much of the negativity surrounding Netflix
Rick mentions the idea that the video downloads will reach mainstream sooner than we think and thus threaten Netflix. While I'm a big believer in the future of digital video, I still think there are plenty of obstacles to widespread adoption. Unless you're downloading a popular file on a peer-to-peer site (and for the most part, that's illegal, although BitTorrent's trying to legitimize its service), video downloading can be a pain. It's time-consuming and the files are extremely large, which makes it a very different proposition from downloading the smaller files of songs and albums. Plus, movies don't have the same allure as music when it comes to portability or even the bragging rights one gets from showing off a killer music collection.
PC World recently reported that Forrester Research has theorized that fee-based video downloads won't make sustainable long-term business, especially considering the current push to high-quality video streaming by major media companies (and of course, Netflix is already ramping up video streaming through its site, so perhaps there's method to its non-downloading madness). A recent research report believes that Apple's
Rick is also right that Blockbuster's
It's easy to perceive the glass as half empty for Netflix right now. However, I think investors who underestimate the company's long-term vision and competitive strengths may one day regret their bearish attitudes.
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Alyce Lomax does not own shares of any of the companies mentioned.