A few years ago, Netflix (NASDAQ:NFLX) pioneered a new market of streaming content. It was a way to transition away from its DVD-delivery business, which had matured.
Unfortunately, the transition has been far from smooth. After all, the stock has gone from nearly $300 to $53.25 over the past year. The problem? It’s getting more challenging to get quality content.
For example, this week Netflix’s licensing agreement for 40 A&E shows expired. As a result, the company has lost access to popular shows like Pawn Stars, Dog the Bounty Hunter, and Ice Road Truckers.
Now, this isn’t necessarily a death blow for Netflix. But it’s definitely a stark example of the company’s vulnerability. Keep in mind that content licensing agreements are generally short-term and are nonexclusive. Oh, and there are mega-players like Amazon (NASDAQ:AMZN) that have the resources to pay top dollar for the content.
In light of all this, it should be no surprise that the stock has remained depressed for quite awhile.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.