Netflix‘s (NASDAQ:NFLX) summer (and fall) to forget continues. After the split of its streaming video service and its DVD-by-mail and a price increase, a poorly worded apology from CEO Reed Hastings, a rebranding of the DVD-by-mail service to “Qwikster,” and a repealing of the rebranding, Netflix could’ve used some good news.
It did get a little. The company reported earnings of $1.16 per share for the third quarter, which beat Wall Street’s EPS expectations of 94 cents. Unfortunately, investors were more concerned about Hastings’ warning after the bell Monday about the continued bleeding of its DVD-by-mail service, which prompted a massive after-hours selloff of Netflix stock.
While Netflix still had 23.8 million subscribers as of the end of September, that number is about 800,000 less than it started with at the beginning of June. Worse yet, Netflix expects fourth-quarter streaming video subscriptions, currently at 21.45 million, to stay about flat at 21.5 or possibly drop as low as 20 million.
Shortly put: Netflix is sinking, and it’s not just investors headed for the lifeboats. Netflix has given customers numerous reasons to jump ship, and with a number of competitors vying for the company’s leadership position in home video, those customers have plenty of places to land. Here are the other home video companies — streaming and DVD alike — waiting to grab Netflix defectors faster than you can say “Qwikster.”
Amazon
Amazon (NASDAQ:AMZN) is a triple threat. It’s got a growing streaming video service through Amazon Prime, which at $79 per year equates to less than a full year of Netflix’s streaming only service. It’s one of the leading DVD and Blu-ray retailers in the U.S., so even if it isn’t renting physical discs, it’s keeping that industry kicking. Physical disc sales in turn keep Hollywood studios that still are skittish about streaming businesses happy and working with Amazon. Finally, Amazon is delivering its own tablet PC, the Kindle Fire, that is built around delivering streaming video through Amazon Prime. The only thing holding Amazon back is the accessibility of Amazon Prime streaming. Unlike Netflix streaming, which is on almost every device under the sun, Amazon is restricted to web browsers.
Hulu
The streaming video company appears to be, as some say, in it to win it. Hulu — which includes both a streaming video website and a subscription-based service similar to Netflix called Hulu Plus — was said to be looking for a new owner just months ago. The service’s corporate masters — which include Comcast (NASDAQ:CMCSA), News Corp. (NASDAQ:NWS) and Disney (NYSE:DIS) — recommitted to the service on Oct. 13, saying they wouldn’t sell. As a paid service, Hulu still is growing and is expected to hit 1 million paid subscribers soon if it hasn’t already. Its free streaming service on the web has made it one of the top 300 most trafficked websites on the Internet. Strong as it is, though, new restrictions on Fox- and Disney-owned content might hurt Hulu in the long run.
Dish Network and Blockbuster
Dish Network (NASDAQ:DISH) spent $320 million buying up the rotting corpse of home video’s former king Blockbuster and the world wondered just what the heck it was thinking. Dish might have the last laugh, though. Dish Network is well-positioned to offer miffed Netflix subscribers a cheap, comparable deal through its new Blockbuster streaming service and Blockbuster’s existing Blockbuster By Mail DVD rental service. As a result, the company might grow its meager satellite television subscriber base, currently around 14 million paying customers. With TV competitors, cable companies like Comcast and other satellite providers like DirecTV (NASDAQ:DTV) still figuring out their place in the streaming world, Dish has a good TV service coupled with a recognizable brand to push streaming and disc rentals — making it a strong contender.
Redbox
Coinstar (NASDAQ:CSTR) has been having a good year overall thanks in no small part to its Redbox DVD rental kiosk business. Redbox brings in 70% of the company’s revenue. With about 33,000 DVD/Blu-ray kiosks around the country and growing, Redbox represents DVD rental convenience. It has no subscription fees or envelopes to worry about, numerous locations and low enough cost to inspire impulse spending. Redbox also is said to be working on its own streaming service, but the company has been mum on the project for months.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
