Comcast also isn’t poor. It has spent a whopping $34.2 billion on acquisitions since 2009, according to Dealogic, and that includes its recent move to swallow all of NBCUniversal. It has been one of the leaders of the TV Everywhere movement, in which cable companies and broadcasters allow Comcast to offer their shows online as a retention tool. Surely Comcast could afford to spend $2.5 billion — or more — to acquire streaming rights for customers. As leveraged as many of the cable and satellite television providers may be, investing in streaming video would seem to make sense given the rise of Netflix and the gradual decline in premium TV.
Unfortunately for them, here’s where Netflix’s $7.99 a month comes in. The average Comcast video customer is paying $153.54 a month. Would Comcast be willing to cannibalize its bread-and-butter business in pursuit of a $7.99-a-month video service? Of course not.
Comcast knows that its model is on a slow but certain death spiral. Why do you think it’s spending so much to own content via NBCUniversal? However, it wouldn’t dare try to challenge the Netflix model head-on.
As rich as Netflix may be, Comcast commands a market cap north of $100 billion.
The great disruptor
Let’s not even entertain Redbox Instant, which is launching with a small catalog of movies and tethered to the dying optical disc as a differentiator. Let’s not assume that HBO, Showtime, and other premium movie channels would slash their price in half and allow stateside subscribers to stream their content without paying up for costly cable plans first.
The only company that could possibly pose a threat to Netflix would be Apple Inc. (NASDAQ:AAPL) , but that challenge would happen years from now, after its long-rumored HDTV initiatives have the kind of scale for Apple to do to streaming video what it has done to other forms of digital media.
Then again, Apple would seem to be better served by selling the piecemeal rentals that Netflix has so far refused to offer than to take on Netflix in streaming itself. Yes, its Rolodex is thick with video producers, but that same connection hasn’t really helped Amazon.
Microsoft Corporation (NASDAQ:MSFT) is the one that would be more than likely to take on Netflix than Apple, and that’s a move that would explain why Mr. Softy is starting to acquire exclusive video content for Xbox users. It would also explain why Netflix CEO Reed Hastings left Microsoft’s board last year.
However, even then Microsoft would struggle — and not just because it’s Microsoft.
The biggest hurdle for any company wanting in on this space is that Netflix has the first 33.3 million people willing to pay for streaming video. We don’t know how big the market will ultimately be, but it’s going to take more than lower price points and better content to woo those accounts.
Get it? Netflix’s moat is healthier than you probably thought.
The article Good Luck Killing Netflix originally appeared on Fool.com and is written by Rick Aristotle Munarriz.
Longtime Fool contributor Rick Aristotle Munarriz owns shares of Netflix. The Motley Fool recommends Amazon.com, Apple, and Netflix. The Motley Fool owns shares of Amazon.com, Apple, Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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