I'm pleased to be joined once again by Colin Dixon, senior partner at The Diffusion Group, for the 141st edition of the VideoNuze-TDG Report podcast.
In this week's podcast Colin and I discuss Netflix's underwhelming Q2 '12 results. As I wrote on Wednesday, the company continues to be haunted by its decision a year ago to essentially abandon its DVD-by-mail business. Although in the very long-term, streaming will dominate, Netflix jumped the gun in de-emphasizing what was a lucrative business with substantial entry barriers. DVD subscribers, which are down by 34% in the last 3 quarters were a huge contributor of profits to the company which it could sorely use now as it pursues an expensive - and uncertain - international expansion.
On international, Colin notes that Netflix's performance wasn't that bad, but he still has concerns, particularly in the highly competitive U.K. market. While Netflix seems to have eclipsed LoveFilm there, Colin's sees the new NOW TV service launched by Sky as overwhelming Netflix in marketing and service quality, in turn suppressing subscriber growth there.
Nonetheless, Colin is still reasonably bullish on Netflix in the long-term, figuring that its size and well-known brand will help it get back on track. Absent shorter-term catalysts, I'm not so sure Netflix can return to its glory days. It will be fascinating to watch unfold.
Listen in to learn more.
Click here to listen to the podcast (27 minutes, 33 seconds)