Competition for Netflix heats up, starting with Vdio

Competitors are taking advantage of Netflix's stumbles. Enter Vdio.

Before the summer, Netflix looked unstoppable. Revenue was great, and it had nearly 25 million subscribers in two countries before a huge expansion to Latin America.

The first stumble happened with Netflix raised its subscription rates. As much as this might have infuriated some customers, it really wasn't a terrible move considering how cheap the service still is. If Netflix had held steady here, it would have likely lost some subscribers at first but bounced back by the end of the year.

Unfortunately, Netflix couldn't hold steady and then lost it by plotting the most ridiculous move yet in ruining the seamless customer service experience in splitting up its DVD and streaming rental services with the creation of Qwikster. Thankfully, Qwikster quickly disappeared.

All of that together has shaken analysts, investors, and customers about the stability of the company. Thus, the door is now wide open for other digital, on-demand content services to take over. And it's not just about Hulu Plus.

There are definitely new options on the horizon, starting with Vdio from the founders of Skype. GigaOm reports that European entreprenuers Niklas Zennstrom and Janus Friis have been "quietly assembling an A-team of media and web technology experts to launch a site that seems destined to replicate the model behind their music subscription site Rdio in the video space."

Upon logging in via Facebook Connect, not much else is known at the moment except that the service is supposedly only available in the United Kingdom, but that's certainly enough to create some buzz and mystery about Vdio. After all, look at what happened with Spotify. That service started off only in Europe, and by the came it finally arrived in the United States, the digital music locker has roughly 250,000 U.S. paid subscribers in the first few months of availability and a reported valuation of $1.1 billion.

However, it would be wise for Vdio's makers to hurry up and make nice with Hollywood studios while Netflix is on the defense. This opportunity might not last long, especially if Netflix can get it together finally.