NetFlix (NFLX) will begin to stream movies and TV shows to customers as part of their DVD rental service. The market’s concern is that the space is getting crowded with companies like Amazon (AMZN), Apple (AAPL), Movielink, and CinemaNow. The service will be offered free to the 6.3 million NetFlix subscribers.
The question is what will "movies to PCs" replace. DVDs, perhaps. Revenue from DVD sales hit $16.6 billion last year. About 33 million DVD players were sold in 2006.
No one format will replace another overnight, but ease of use is certainly a hallmark of the success of emerging consumer formats. DVD sales have replaced VCR products. DVDs by mail are replacing products purchased in stores. If the next wave is video-to-the-PC, $16 billion is a large market.
The networking of the PC to the TV which is being pushed by Microsoft (MSFT), Intel (INTC), and Apple (AAPL) is likely to accelerate the attraction of films and TV shows delivered over the internet. The founders of Skype are launching a new service to deliver premium content to computers.
Wall St. may be concerned that the field is getting crowded, but the opposite may be true. There may be room for many more service.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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