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    Hulu With New Owners Could Spoil The Netflix Party

    By Trefis Team | Forbes – Mon, Jul 18, 2011

    Netflix’s recent announcement regarding its new subscription plans could have been partially driven by the fact that Hulu is about to be sold. Hulu offers online streaming of movies and TV shows which are available both for free as well as for a monthly subscription fee. Hulu was previously considered a serious threat to Netflix, but it failed to live up to expectations. Considering that there are some strong contenders in line to buy Hulu, it could end up challenging Netflix again if it falls in the hands of big player like Google or Apple that have huge distribution platforms and deep pockets.

    This could be one of the several factors that Netflix considered when deciding to change its pricing plans. We discussed in a recent note that rising content costs and competition from a Dish-owned Blockbuster and others were prime drivers to this price hike, see Netflix Bets on Customer Loyalty as Higher Costs Force Price Hike. As competition heats up, we expect Netflix to continue to add to its streaming content to make it more attractive. This will help it fend off future threats from streaming players like Hulu, iTunes, Dish and others.

    [trefischart ticker=NFLX width=350 driver=0532]

    Since customers with hybrid plans pay about 60% more for the bundled package, we think this will help drive revenue in the near term while enabling DVD subscribers to pay more for this service (a $7.99 streaming-only option was available before).

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    The risk here is that it could fragment its user base among streaming and DVD customers enabling competitors like Blockbuster and Hulu to more easily lure these customers away.

    Our price estimate for Netflix currently stands at $153, which we are reviewing in light of the new pricing plan and Latin America announcements.

    See our complete analysis for Netflix

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    2 comments

    • It's Olllld Buso Ragu ...
      It's Olllld Buso Ragu ...  •  10 mths ago
      Both of these services feature one common thing: Tons of shows that I'm not interested in watching. There's no History Channel, Adult Swim, or even the Soup. It's just a bunch of hour long dramedy's and the edgiest bland network shows
    • UDn'tHv2AgreeWTruth
      UDn'tHv2AgreeWTruth  •  10 mths ago
      What I can tell you is that Netflix streaming is terrible in selection and quality. I want the newest movies in high definition quality, streaming doesn't give me this. Blockbuster Total Access for the first time in years is actually better in their disc plans like the one I just adopted after cancelling my Nexflix subscribtion. What to bet; see for yourself and confirm this in their websites.
      Netflix: $14.99 for 2 DVDs. Blockbuster: $14.99 2 DVDs or Games, Blu-Ray movies included, unlimited store exchanges for mailed movies, some movies released 28 days earlier.
      Sorry Netflix, we have found you're not indispensable. Amazon Prime is now covering for the streaming if my children's favorite cartoons.
     Post a comment
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