Friday, April 27, 2012

Netflix Fighting Uphill

The future of Netflix looks grim as it simultaneously competes with two key partners: those who provide the bandwidth that makes Netflix streaming possible (AT&T and Comcast sell bandwidth as a sideline to their sale of multimedia subscriptions), and Amazon – whose Amazon Web Services runs Netflix' back-end (and that of Netflix' streaming service, which pays less for the service).

I pitch Netflix as the short leg of a Disney long/short. Those who love Amazon could use it as the long, but I'm nervous about Amazon's nosebleed P/E and its thin margins.

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