On which fronts Netflix should be careful about? 1. The rise of aggregated content streamers such as Hulu which will not only contend for share of future subscriptions but also eat into existing market shares 2. Of course, there are the HBOs and the Star Movies which have traditionally offered movies through subscription fees charged to cable operators and are now trying out the direct to customer model 3. The existing cable operators who are planning to form partnerships or acquire wireless carriers (e.g. the DishNetwork and Sprint deal) and who will start offering its customers its rich content across multiple devices. I think if these kind of operators price their product offering appropriately and can form some partnerships with the big media houses, they will provide the biggest threat. Verison is also venturing into this space. So, there are different partnerships being formed though they are fundamentally the same .5. Lastly, there are the likes of RedBox who have till date built a strong kiosk based model and are looking to expand into online streaming through their service, RedBox Instant.
In light of all above potential threats, I think that though Netflix will face significant challenges , it is way ahead of the herd right now. Recommendation – ‘ Maintain the core but expand its reach’. RedBox would be a very good acquisition target for Netflix