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Netflix is #1

April 27, 2011 | Author: Ibex Marketing

Pay no attention to the man behind the curtain! It’s just little ol’ Netflix, doing it’s little streaming video thing. Nothing to see here, move along, move along. At least, that seemed to be the message on Monday when CEO Reed Hastings announced the company’s first quarter financials. All they did was about double worldwide revenues and about double U.S. subscribers over the previous year’s number’s. Oh, and overall revenues were up nearly 50%. But Hastings stressed that Netflix “is a supplemental channel to MVPD.” (MPVD is tech speak for Multichannel Video Programming Distributor, which you and I might call subscription television services, like cable and satellite.) So do not fear little ol’ Netflix, you establishment enterprises; it’s not the agent of some cord-cutting nightmare.

Oh, and by the way, Netflix has passed Comcast in number of subscribers, which makes it the number one television subsctription service in the country.

Should Comcast and the other cable companies be concerned? Netflix has only landed a deal for its own original content, with Kevin Spacey starring in the new series House of Cards. It made a deal for past and future episodes of the hit Mad Men. It spent $1 billion to license films from Paramount Pictures, Lions Gate, and MGM. Sure, it’s just a little movie rental company. (Isn’t this how HBO got started?)

Lots of analysts are saying that the new Netflix business model is not sustainable. They’re probably right. But for now, the company is building up its bank accounts, and when it’s ready to establish a new strategy, it’s going to have its own deep pockets, an enormous brand, and significant momentum that can carry it through to its goal. Just remember, there was a time when Amazon was just an online bookstore.