Finally, Netflix, Inc. (NASDAQ:NFLX) is increasingly partnering with ISPs (internet service providers) that offer Netflix as a promotion for their higher speed internet products. This is beneficial for Netflix as it gains customers and also avoids paying third-party CDNs (content delivery networks) like Akamai Technologies, Inc. (NASDAQ:AKAM), Limelight Networks, Inc. (NASDAQ:LLNW), and L3. ISP providers also benefit because they have another carrot to wave in front of consumers to entice a switch to their service.
Overall, Netflix, Inc. (NASDAQ:NFLX), Pandora Media Inc (NYSE:P), and Sirius XM Radio Inc (NASDAQ:SIRI) have formidable sources of competition. The companies that compete with each of them are both established media companies and newer entrants, as well as emerging technologies (in the case of Sirius).
Netflix faces competition in original content from Hulu, Amazon Instant Video, and Xbox Entertainment Studios, and in video distribution from Hulu, Vudu, Redbox, Vdio, Amazon Instant Video, Apple Inc. (NASDAQ:AAPL) TV, and YouTube.
Sirius’ service could become redundant if cars are equipped with 4G internet, which some car manufacturers plan to launch starting in 2014.
Pandora is competing with traditional radios that have an internet presence, including Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)‘s iHeartRadio. Also, Apple recently announced the launch of an internet radio, and there are a number of smaller companies competing with Pandora including Microsoft Corporation (NASDAQ:MSFT) Xbox Music, Slacker, Spotify, and Songza.
Despite increasing competition, Netflix, Inc. (NASDAQ:NFLX) has the advantage of being the leader in “all you can eat video” for a monthly subscription rate. With plans for making north of 20 shows per year of original content, it is likely to become the leader in original content.
Sirius XM Radio Inc (NASDAQ:SIRI) could see its satellite-based radio service become obsolete if cars are equipped with an internet connection. Also, both Pandora Media Inc (NYSE:P) and Sirius have very limited foreign capabilities, which have become essential for successful technology-based media companies.
Conclusion
There are uncertainties with investments in technologically-intensive and consumer-oriented areas. It seems like Netflix, Inc. (NASDAQ:NFLX), compared to Sirius XM Radio Inc (NASDAQ:SIRI) and Pandora Media Inc (NYSE:P), has the best balance between growth, established user base, competitive position, and international diversification. All this, together with a relatively fairly-priced stock and solid fundamentals, leaves Netflix as the logical investment choice in the media streaming space.
The article Investing in Streaming Stocks Could Be Risky originally appeared on Fool.com and is written by Delian Naydenov.
Delian Naydenov has no position in any stocks mentioned. The Motley Fool recommends Netflix and Pandora Media (NYSE:P). The Motley Fool owns shares of Netflix. Delian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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