Great Debate: Will Netflix emerge from its big collapse a long-term winner?

Closing Statements

Why Netflix can still win

Steven J. Vaughan-Nichols

So, with management missteps, grumpy content providers, disillusioned customers and potential competition from Amazon, Apple, and Google why do I think that Netflix can still win? It's simple: They still have no real competition.

Netflix is still the largest one price for all you can watch DVD and streaming video company out there. Its non-video rivals may be bigger, but their video-on-demand services still use a pay to watch a single model. Netflix's video rivals, such as Redbox and Blockbuster, have little streaming presence and they've also raised their rates in the last few weeks.

It's not easy to set up a big-time video streaming company. You've got semi-hostile media companies; you have to partner up with content delivery networks (CDN)s; you've got to get your player software in DVD players, media-extenders, etc.; you must set up serious video server data farms. It's a big job. Netflix already has all the parts and its one price business model. No one else does.

Netflix - It's terminal

Christopher Dawson

My colleague, Steven J. Vaughan-Nichols, outlined some very reasonable arguments explaining why Netflix will thrive in the future. Most importantly, he cited their subscription model, noting that "no other streaming service offers so much for so little." He’s right, of course, but this is hardly a defensible market position.

Perhaps the clearest reason that the company's unfortunate fate is already sealed, though, is the changing hardware, software, and content landscape. Ubiquitous streaming HD content on mobile and other connected devices is just around the corner. With Apple retaining dominance in the tablet space and Amazon dumping their Kindle into the market, the concept of ecosystem has never been more critical.
 
Too many strong competitors, too many PR gaffes, and too clueless a leadership team mean that Netflix was in the right place at the right time 10 years ago, but missed the boat for 2012.

Netflix will survive, thrive

Lawrence Dignan

This debate was a bit strange because the two parties often agreed. Dawson argued that Netflix has more pain ahead---and could be right. Vaughn-Nichols agreed that Netflix may still take its lumps, but will recover in the long run. In the end, the winner comes down to time frame. I'll side with Vaughan-Nichols on this one: Netflix's mistakes were messy, but not fatal. Netflix has its issues, but the business has scale and can be defended against rivals.

Doc's final thoughtsIN PARTNERSHIP WITH Ricoh

Doc

Doc has to agree with Christopher on this one. Only the death of Netflix may not be long and painful, it could be short and painful. As Christopher points out, this is a public company and subject to the whims of the market along with the whims of customers. The company’s stock has already dropped from a high of near $300 to $90 per share – that’s a stunning loss of corporate value.

You only have to look at the fate of video-rental mega-chain Blockbuster to see this movie play out. At its peak, Blockbuster had over 43 million members in the United States, over 6,500 stores worldwide, 60,000 employees and $4 billion a year in revenue. But then technology changed, the market was not kind, and in April Blockbuster was purchased out of bankruptcy by Dish Networks for $320 million. Yes, it’s still around, but is a shadow of its former self and clearly no longer the leader in video rental, streaming or anything else (despite trying very hard to make the appropriate transitions).

Netflix worked because it was the right service at the right time. There is no guarantee that the new streaming model for Netflix will be successful, despite the company’s 28 million subscribers. People dropped their loyalty to Blockbuster pretty quickly when something better came along so Netflix needs to be careful. It’s a fast moving world and customers will go where there is convenience, good pricing, and the right technology. Today’s Netflix could easily be tomorrow’s Blockbuster. Brand loyalty isn’t what is use to be.