Everyone seems to be ganging up on the Netflix
- Several reports are surfacing this morning, indicating that Amazon.com
(Nasdaq: AMZN)is in talks with studios to roll out a film and television streaming service on a subscription basis.
(Nasdaq: CSTR)Redbox promises a digital strategy announcement next month.
- Studio-backed Hulu rolled out Hulu Plus, a premium subscription service with deeper dives into playing back televised content.
(Nasdaq: AAPL)is now one step closer to delivering video rentals directly into your TV.
(Nasdaq: LOGI)Web-scouring Revue set-top box -- powered by Google's (Nasdaq: GOOG)promising Google TV platform -- hits the market later this year.
It's about time! I know I wasn't the only one wondering how stupid these tech darlings were in assuming that folks wanted to pay up for piecemeal streams while Netflix padded its rolls by a million couch potatoes every passing quarter. Everybody loves a buffet, especially one that excels in offering quantity and quality at a pocket-pleasing price.
Unfortunately for all of the late arrivals, it's too late. The game's over. You should've suited up earlier.
It doesn't matter who works the speediest handshakes for content deals in Tinseltown. It doesn't matter that tech darlings Amazon, Apple, and Google rarely fail. Netflix has one thing that none of these companies will ever have -- it backed into the digital revolution.
Back to the future
Netflix grew its empire from the ground up when optical discs were the future. Whether it was building out regional distribution centers to provide overnight postal delivery to most of its subscribers or amassing years of gnawing on flick preferences to set up members with nearly perfect movie recommendations, Netflix will own digital video because it thought of everything, long before DVD handed the baton to streams.
Why is this so important?
Well, what are the chances of all of the studios -- major, indies, and foreign -- coming together to offer their entire catalogs through a single streaming service? Even if one provider cornered the digital subscription market, do you really think that every studio would play along?
While you work on that answer, take the time to purchase the entire music catalogs of The Beatles, Kid Rock, and AC/DC on iTunes.
Oh, that's right. You can't. Even Apple's iTunes -- the country's leader in overall music sales after rising past Amazon.com and Wal-Mart
However, studios will continue to crank out films and television show seasons on DVDs and Blu-ray discs. It's an incremental revenue stream that may continue long after every home is wired to the Web.
You don't think there's much of a moat in digital distribution? When is Apple or Amazon going to begin opening up regional distribution centers to provide rental discs they can't stream? When is Coinstar going to turn its modest Redbox kiosks into doublewide trailers to stock tens of thousands of flicks?
It's just not going to happen. Regardless of any subscription offerings that the latecomers dream up, they're not going to be able to match Netflix's service that offers the best of both worlds for as little as $8.99 a month.
Bypassing the moat, but not the remote
Taking on Netflix won't mean certain doom. There will still be niche players, especially for those willing to stomach aggressive pricing. Redbox will be an interesting player, even if its physical distribution will be limited to new releases. Apple will draw a crowd given its ironic mainstream success these days.
At the end of the day, though, all roads to digital convergence will likely go through Netflix.
Is CEO Reed Hastings a genius, or was the successful backward engineering of the digital revolution simply serendipitous?
Does it really matter? All you need to know that every headline you come across this week -- positioning Apple or Amazon as a potential Netflix killer -- rings hollow because their guns aren't loaded.
Silly prop guns.
Can anyone truly overtake Netflix in digital distribution? Share your thoughts in the comment box at the bottom of this queue.
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Longtime Fool contributor Rick Munarriz has been a Netflix subscriber -- and shareholder -- since 2002. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.