April 23 - Investors are back on the Netflix bandwagon, but Jeffrey Goldfarb and Breakingviews columnist Rob Cyran discuss why the online video service could just as easily fall out of favor again.
The extraordinary story that is Netflix continue to wild ride today Stockton had. Shot up as high as 300 dollars a share is now won't drop down to fifty it's now back up over 200 hit some results surprised the market. This is the story just I guess for us to seized upon during wires are on so positive about whatever and so positive because this story is that. They're new shows such as house of cards -- just you know phenomenally popular and it's added them pursuant to -- -- million members of paid members have joined. And now erroneous page description -- exact. They -- adult entertainment and they're contained dad members and so that the story is that that you know that sets them up for being a bit the video service in the future. The problem is the producers of -- is like. Like brazile who -- be the country the future is kind of -- very free cash flow was negative in other words the business is consuming cash. And the balance sheet continues to get worse is they keep on adding I'm buying new contents. Comment producing content and that means they have to pay -- the promise they can't. If this massive disruptive service in the -- the ecosystem whatever -- call in terms of they started this whole conversation and over the top and you know cutting a cool word and I don't like to. Yet in other words thinking your cable through cable you're you're getting Netflix there a connection and you're paying a lot less. The -- they've also -- so things like we've talked about -- -- introduce -- the engineering which -- tonight which was honestly I'm guilty of the united right as they went out of his has dumped. Thirteen episodes and you want you can and you always always a little we can watch as opposed to waiting weeks for we can and what that does is -- that maybe it's it's it's great for people who like to watch it like that but the problems for advertising maybe it's not. That great of a hole I mean other broadcasts are having to -- adopted us -- but at the same time you know Netflix as you say they're sort of there's this positive momentum on the ones -- but they're also lose this viral on the elderly -- -- it if he can if you're not producing cash one of the words if you -- if you're actually not. Making money clip called that I. It's very hard to continue to -- -- content and produce content and then they've got. Here they're producing a lot more shows they're producing a lot more original for -- the result for me exactly and that that's very expensive in the from the united bigger cost of buying existing content also has gone up a -- start out with discreet little deal. I think with stars and and then all of sudden when ever realized. How great it was the price well 4684. Exactly and then and like house occurrences is virtually UK show in the -- they never went to produce that. And you know -- -- -- there are a lot of cable network's interest in getting in permeate that and -- got you know HBO all these. All these different networks are trying to produce original series and if if Netflix is is getting in there and in trumping them then ever and also start. Anymore it's where I mean what other. There is though is that one of the ways they could maybe start to produce counselors is to raise their prices if they can get to a critical mass -- the bump up the price of corporate subscribers is that then. Change the equation big -- -- president that it will it will customers actually stick around we don't know if it's it's the question ams on this case it's kind of similar to Amazon and that. They can keep on growing progress there and says okay profits are just around the corner for profits and ever since come. -- will keep an eye on it the wild ride of Netflix continues and we'll be back with more breaking news tomorrow.