I’ve been working with the major studios for over 20 years and have seen a lot of changes in the home entertainment business. One company that continues to fascinate me is Netflix. It’s a company that is really at the forefront of all the trends in media and entertainment – some good, some bad. There’s a new book out about the founding period of the company called Netflixed: The Epic Battle for America’s Eyeballs by Gina Keating. Sounds like a great read. So, here’s a few thoughts from someone who’s been around the video business for a while… I’m not the first one to say it, but Netflix is reminding me a bit of AOL in the late ‘90s. Remember all those discs that AOL mailed everybody all the time? Netflix’s marketing is similarly aggressive. Hmmm…sound familiar? Netflix has a ton of subscribers and is generating significant revenue from them. The last estimates I’ve seen were that Netflix has about 30 million subscribers worldwide. I don’t know what the average subscriber pays per month, but let’s say it’s $10. You do the math. That is some pretty impressive cash flow. But… Netflix DVD subscribers are declining, and the competition for streaming video subscribers is heating up. Netflix has competition there from cable companies, other Internet sites (like Hulu or HBO.com), and big players like Amazon, Google (owner of YouTube) and Apple (in the form of the ITunes store). And, of course, there was the customer debacle associated with Qwikster, the now-abandoned name of the separate DVD site for Netflix subscribers still interested in getting DVDs by mail. This move hurt Netflix – both in subscriber losses and a decreased stock price, but, more importantly, in customer goodwill. All of a sudden, instead of being everybody’s favorite subscription service, Netflix was a price gouger insensitive to its customers’ wishes. So what’s next for Netflix? Netflix’s true advantage is in its subscriber base. It’s going to take a while for any single player to catch up to their numbers. But…their Achilles heel is content. Netflix has to license all its streaming content from other companies. If you’ve ever noticed, there are no HBO shows on Netflix. No Sopranos. No Game of Thrones. No True Blood. Netflix has some good stuff from AMC (Mad Men, The Walking Dead) and some other popular “binge viewing” shows (Gossip Girl, Glee), some newer movies, and a lot of great documentaries and kids’ content. But sometimes I look on their streaming listings and think…hmmm. So, it will be interesting to watch when there are a certain amount of consumers that want something that Netflix doesn’t have – and they go somewhere else to get it. I don’t think Netflix is going anywhere anytime soon but they will need to continually evolve and react to customer demands to stay on top. As you may know, Netflix is getting into the content development business. They did their first show last year (Lillyhammer) that didn’t make much of an impact. But their next project is big. It’s a remake of the BBC show House of Cards starring Kevin Spacey with the first two episodes directed by David Fincher – director of The Social Network. It’s a big gamble for them. They’re spending a lot of money on it and who knows if audiences will like it. Plus…how much does Netflix know about making television? Netflix is posting all 13 episodes of season one on February 1, 2013. At least Netflix knows enough about their audience to give them what they like: a lot of episodes at once to binge on.