The Wall Street Journal‘s astute Martin Peers warns tonight that Netflix “stock-price bubble may be close to bursting” because Hollywood studios and networks don’t like the competition. The share price has doubled since November, “taking it to a rich valuation of 26 times estimated 2009 earnings — a loftier multiple than either Google or Apple.” But the DVD mail order business wasn’t what juiced investors: it was Netflix’s streaming service. And reports that rival Blockbuster could be facing bankruptcy didn’t hurt. But now “Hollywood studios appear to be waking up to the threat posed by Netflix’s instant-watch service, which the company says is being used by millions of its subscribers,” Peers writes. “That almost guarantees that studios will look to renegotiate Netflix’s content-supply deals on tougher terms. At the same time, some of the studios [like Disney] are pondering their own online movie- or TV-subscription services.” The WSJ also notes competition coming from Amazon’s IMDB, which is expanding a free ad-supported streaming service. Concludes Peers: “Netflix fans take note: A correction is looming.”
Big Media Cartel About To Punish Netflix?
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