Netflix’s big problem, it seems to me, is that it can’t afford the content that its subscribers most want to watch. It could try to buy streaming rights to every major Hollywood blockbuster in history — but doing so would cost hundreds of billions of dollars, and could never be recouped with $7.99 monthly fees. What’s more, the studios can watch the Netflix share price as easily as anybody else, and when they see it ending 2013 at $360 a share, valuing the company at well over $20 billion, that’s their sign to start raising rates sharply during the next round of negotiations. Which in turn helps explain why Netflix is losing so many great movies.
Since they can’t be our go-to for the latest and/or greatest movies, their strategy needs to be different. Good original content. Making it easier to find older/niche-like movies.
And it’s already working. I already think of Netflix as the place to go watch older movies, documentaries, indie movies, etc. And iTunes as where I snag the latest releases.