Netflix Misses the Big Picture


So, "Argo" received the coveted Oscar for Best Picture. Hey, if you missed the flick while it was in theaters, you might want to check it out, right? Don't look to Netflix's streaming service for it. I already looked -- it isn't there yet.

Fear not, if you're desperate to see the movie, get's Prime service and rent "Argo" via streaming for $3.99. If you'd rather use Apple's iTunes, you can rent it for $4.99.

Could investors, analysts, and other interested parties please acknowledge why the frequency in which Netflix's entertainment options are simply MIA is a major problem for Netflix's future?

Queuing up disappointments
I'm one of the subscribers signed up for Netflix's streaming-only service, and I'm personally pretty frustrated. I hardly use the service anymore. Every time in recent memory that I have looked for some movie that's relatively new that I'd really like to watch, I've ended up disappointed. I've ended up simply renting the movies and occasionally TV show seasons such as "Dexter" from (gasp).

Maybe I have quirky taste and my feeling here is way too anecdotal. However, I simply don't believe I'm in a minority of frustrated Netflix subscribers. Add up the rental fees to instantly watch what you want to see now through other services, and there's a point where the Netflix streaming service simply doesn't make economic sense anymore, especially when there are so many other areas vying for our time and attention.

A giant queue of second-string programming sure isn't going to help Netflix. What used to be a wonderful selection of high-quality and more obscure, artsier fare when Netflix was a DVD-rental giant has deteriorated into what feels like mostly a collection of antiques and also-rans.

What did Netflix recommend as a consolation prize for its lack of instant "Argo"? It offered up "House of Cards" (granted, putting out its own programming is one good idea the company has had). However, it also served up a variety of films that members are supposedly streaming instead of their first choice, "Argo:" "Barfi!," "Heroine," and "Seal Team Six." I can't say I have heard of any of those, and even if they're perfectly fine, underrated sleeper movies they're a far cry from the one that won Best Picture at the Oscars.

New Houses and Sesame Street aren't enough
Netflix does have original programming such as "House of Cards" (which I have heard is good ). Netflix also recently penned agreements with Disney and, more recently, DreamWorks Animation , the latter of which will provide an exclusive show called "Turbo F.A.S.T." Both of these agreements will probably make kids (and parents) happy and add some goodwill for Netflix, but I don't buy that these are suitable grounds to believe Netflix's day has been saved.

Take Amazon's recent deal with CBS , through which it will offer episodes of "Under the Dome" mere days after broadcast. Talk about instant gratification.

Services from such heavyweights as Amazon and Apple are stealing Netflix's bread and butter, basically. The irony is that they've got many more tricks up their sleeves product-wise than Netflix's one-trick pony, so destroying Netflix may be like swatting an annoying fly for them. This is particularly true in Amazon's case, since its streaming service comes as part of the Amazon Prime membership. In other words, it's just another nice perk to add Prime members into its ecosystem.

Meanwhile, Netflix simply keeps disappointing. This was once a company that rated incredibly high on user satisfaction. According to a major Consumer Reports survey last summer, although Netflix still enjoyed a large number of subscribers, user satisfaction dragged behind six other rivals. Pathetically, this list even included Wal-Mart's Hudu (who?). Ouch.

Show's over for Netflix
If you're looking for a cheap growth stock, buy Apple. Despite relentless buzz about business threats, Apple's share price has been ridiculously beaten down and the Apple brand and product selection are a long way from broken. Maybe the company won't be quite what it used to be, but the stock having fallen 20% in the last 12 months is simply absurd.

If you're looking for a contrarian play, go for Many will tell you it's overvalued, but brushing at Netflix like a fly is just one example of how many ways this company is building insanely ironclad competitive advantage and helping itself to many, many other companies' businesses.

Regardless of what the "smart money" seems to be saying right now, avoid Netflix. It is terribly overvalued now. Those who bought shares at their lows should take the money and run. Given the major disappointments Netflix now consistently deals to customers in the real world -- as opposed to investors' theoretical numerical scenarios and misguided views of what a "value" is -- the show's over, folks.

The precipitous drop in Netflix shares since the summer of 2011 has caused many shareholders to lose hope. While the company's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why we've released a brand-new premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. We're also offering a full year of updates as key news hits, so make sure to click here and claim a copy today.

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Alyce Lomax has no position in any stocks mentioned. The Motley Fool recommends, Apple, DreamWorks Animation, Netflix, and Walt Disney. It owns shares of, Apple, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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