COMMENTARY | The recent stock price troubles of Internet video streaming giant Netflix are a prime example of the troubles facing the subscriber-based service. As WebProNews reports, Netflix shares have plummeted despite the company adding 3 million subscribers during the first quarter. Growth is slowing, which is worrisome, but doubts about Netflix's business model are also starting to creep up. The short story would be that Netflix is on its way out of the limelight.
As The Week reports, Netflix is not the only company that streams movies over the Internet. Further adding to Netflix's problem is the fact content has to be licensed from studios that produce the TV shows and movies. And those studios will only continue to raise those fees as Netflix reports profits. Therefore, the once proud giant is stuck in the middle of raising subscription rates, which does not go over so well, or making less and less money.
Still, PaidContent.org reports the falling stock price and reports of Netflix's demise are premature. Netflix has an app for streaming available on just about every popular electronic device imaginable, and the company is among the first to go international with its service. While those might be good points, Netflix lacks the current and new release power to draw in new subscribers. Since it is no secret that studios prefer a pay-per-view setup versus the monthly subscription design, things do not look so good for Netflix.
Netflix is in serious trouble and is under attack from competition one what seems like all sides imaginable. The service is a great complement to on-demand or pay-per-view services, like Vudu, but aside from that role the video streaming service is on its last few legs. Only a major acquisition or innovation can save the company from being swallowed up in a storm of streaming options, and time will tell which direction it is going to go.