The fight between Netflix and other strong competitors in the streaming video market continues to intensify with Amazon now able to offer their films through the Sony Playstation. While Netflix did have competitive advantages in the distribution of dvd’s business, they have far less in the streaming video business. Higher programming costs and increased competition are likely to continue to pressure margins, and require more capital to maintain a leadership position. I think ultimately we are likely to see some consolidation in the industry and 2 or 3 companies will control much of the market. Netflix has every opportunity to be one of them but the question that an investor has to ask themselves is whether the valuation currently reflects that.
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