[wadea]

Netflix has the "first mover" edge in its industry. I've been long a couple of years now. There is an economy of scale in this business and since NFLX has way more subscribers than any competitor, it is able to maintain better profit margins. Additionally, b/c of their size, they have more titles and distribution centers, so their turnaround time on movies is the fastest across the US.

Consider this, WalMart recently quit the DVD-by-mail business. Because of their other revenue sources, it would seem that Walmart could have easily run into the red for a while to acquire customers. It appears that despite offering the lowest price of any major DVD-by-mail service, by the time they quit and gave their customers to Netflix, that number of subscribers had "a negligible effect" on NFLX subscriber counts.

So, with Walmart gone and Amazon still sitting on their hands, Blockbuster is the only major comptetitor and they've got debt issues to the extent that is sounds like they are considering raising prices. They'll never gain subscribers this way. BBI's debt is like a huge pair of handcuffs. This is on top of the fact that they've lost a ton of consumer trust with that "No late fees" scam.

Buy it back,
-w.a.