Analysts are going to be coming out of the woodwork on this one. Every analyst out there thinks they know the answers and know what Netflix is going to say when they report earnings today. I think they are going to be dead wrong. In the short term, yes Netflix has seen some adverse reaction to Blockbuster’s “Total Access” campaign, but I still believe it is goint to be short lived. Look at Blockbuster’s stock. It hasn’t broken the $5.00 mark since April and has been on a downward slide ever since. On March 12, 2007 BBI was at a 52 week high of $7.30 while today in intraday trading is at $4.21.
Netflix is still the premiere brand here. They still command a greater online presence than Blockbuster and I think the price cuts are going to help. Analysts will point to revenue suffering as a result of the cuts, but I think it’s going to be beneficial in the long run as they gain subscribers and people upgrade from the lower plans to the higher ones. “Watch It Now” is also going to get better as they bring more of their library online, something Blockbuster doesn’t even have in the works. Netflix will continue innovating in the field of online movie delivery and I wouldn’t be surprised to see Hollywood studios lining up to release first run films soon simultaneously with theatrical releases using something like what Netflix has now.
I don’t think we see a turn around in Blockbuster until December when current CEO John Antioco steps down and hands the reigns over. Until then, bide your time and use this opportunity to pick up more NFLX on the cheap.
