Is the BSkyB Falling on Netflix?
Netflix (NAS: NFLX) has a new adversary overseas.
BSkyB -- the U.K. satellite television giant controlled by News Corp. (NAS: NWS) -- revealed that it will be throwing its hat into the premium streaming ring.
Amazon.com's (NAS: AMZN) Lovefilm undercut Netflix with its own streaming service when Netflix launched in Ireland and the U.K. earlier this month. A group of leading broadcasters and Internet service providers are hoping to launch YouView later this year.
Netflix's stock is trading lower on the news, but it's not as if investors should be surprised. The chances of Netflix running into either established competition or hometown faves in the process of launching a Web-served streaming service will grow with every country or region that it targets for expansion.
Netflix has already said that it won't announce a new expansion market until it can get its existing streaming markets profitable. In other words, the breakneck exporting of the Netflix brand is about to cool after rolling out in Canada, Latin America, and the Caribbean before crossing the Atlantic this month.
How big a threat BSkyB will be to Netflix will depend largely on BSkyB. The company already has a presence in 12.5 million U.K. homes. If it only offers its streams to customers as either a retention tool or an incremental revenue stream, Netflix won't have anything to worry about. The only BSkyB move that Netflix has to worry about is if BSkyB is willing to cannibalize its satellite broadcasting business by other cord-cutters a cheap monthly video service.
It's not an easy call to make. DISH Network (NAS: DISH) decided to make its Blockbuster-branded premium digital video business available only to existing DISH satellite television customers, and we're not hearing a lot about it.
However, it's clear that the unique circumstances that have allowed Netflix to corner the stateside market in premium streaming are unlikely to repeat internationally.
The world's an interesting place, and it's about to get even more interesting for Netflix.
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At the time this article was published Longtime Fool contributor Rick Munarriz has been a Netflix subscriber and shareholder since 2002. He does not own shares in any of the other stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Motley Fool owns shares of Amazon.com.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com and Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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