The success of Netflix has changed everything — the writing is on the wall. Major League Baseball has MLB.tv, an online subscription service that starts at $19.99 per month. The NFL Network streams Thursday night football games on NFL.com. The other major leagues will follow MLB and the NFL, it’s just a matter of when. One potential competitor Netflix must keep tabs on is Apple. Apple will unleash iTV at some point, but Netflix is so far ahead of Apple in this space. Apple is never going to create original content, while Netflix is producing hits like “House of Cards.” Apple knows it can’t be a Netflix, nor does Apple want to be Netflix. Apple can tell its story well, and up-sell devices, but that is about it. Netflix will remain the gold standard in online entertainment for at least five years before capable competition starts to nibble away at the dominance Netflix holds.
Come at me bro
While Comcast Corporation (NASDAQ:CMCSA) is “officially” a competitor of Netflix, the cable company is losing ground to many of the current Over-The-Top content providers (OTT). Comcast has 22 million pay-TV subscribers and 19 million internet subscribers. Netflix has 28 million pay-TV subscribers. Comcast Corporation (NASDAQ:CMCSA) faces an uphill battle with Netflix, Inc. (NASDAQ:NFLX). Comcast is beefing up its offerings to provide a better multi-screen experience. They recently reached multi-year agreements with FOX, Tribeca Film Festival®, and Outdoor Channel to make more programming available to cable subscribers using Comcast Corporation (NASDAQ:CMCSA)’s Xfinity TV Everywhere. While Xfinity TV Everywhere is a step in the right direction, Netflix will dominate because it will continue to add more value for customers — it’s just better and cheaper than cable. Over the last quarter, Comcast stock was up 7.73%, Netflix was up 57.92%. Comcast has lost the confidence of hedge-fund investors; they, like consumers, just don’t see the value in paying for cable.
Who is the main competitor for Netflix? It’s HBO, as proxy for Time Warner Inc (NYSE:TWX). HBO has great programming like “Game of Thrones” and “Girls” that are ratings hits. HBOs “Girls” gets about 4.6 million when viewed via OnDemand, DVR, and HBO Go. The very fact that HBO is even considering offering HBO Go for non-cable subscribers screams out to the dominance of Netflix, and the absolute lack of competition in this space. In the United States, Netflix has 29 million paid subscribers and HBO has 28.7 million. This battle between Netflix and HBO is going to get interesting, fast.
While most networks and cable providers navel gaze, Netflix, Inc. (NASDAQ:NFLX) is booming. It has become that “other product or service” viewers have settled on. More people will “cut the cord” on cable and dish services. The content these providers offer is cheap, but their subscriptions are expensive. This is the fuel for the increased share price of Netflix. We’re in a transitional period now, and many have decided that they can live without TLC, HGTV, A&E, ESPN, CNN, or those catty Housewives of “some place with lots of gated communities.” While many yearn for the good ole days when a cable bill was only $50 per month and they could catch “Shawshank Redemption” (again) on a lazy Sunday, they happily sign up for a Netflix account so they can save money and see just how low Francis Underwood can go.
The article Why Netflix Is Smashing The Competition: It’s The Economy originally appeared on Fool.com and is written by John Moore.
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