Do you remember Blockbuster Video?
My teen and young adult years were filled with seemingly nightly trips to our local Blockbuster Store to rent a few movies and grab a pizza or some burgers on our way back home.
The people that worked at the store were more friends than the random accouterments that employees become in many big box stores…
These “movie pals” would recommend some of their favorites, help you find what you were looking for – and sometimes – would even hold that hot new title to the side for you to ensure that you got to rent it.
It was great!
That is until a few small little operations by the names of Redbox and Netflix came to prominence in the industry Blockbuster dominated for years.
And as successful as Redbox has become (holding almost 50% of the physical rental market…
The real game changer was Netflix (NFLX).
How did they change the game? Their original business model was simple: take the trip out of the equation.
Netflix’s original model was to allow members (who paid $9.95 a month for at a limit of two movies at a time) to order their movies online, then they would be mailed to the member’s house with a paid postage return envelope.
Set up the movies in your queue, get it sent, watch it, send it back, and then wait for the next movie to come.
It became so successful in just a few years of doing business – that it actually made an offer to buy Blockbuster – an offer which was declined, possibly because Blockbuster thought they were too big to fail.
Blockbuster’s upper management probably laughed at this little up and comer even having the cojones to make an offer. I mean, think about how big they were!
With the size difference between the two it would be like a high school football team offering to buy the Pittsburgh Steelers.
But the Netflix team had vision…
They knew they were headed on the right track and simply stayed the course.
By 2010 – Blockbuster – one of the biggest names in home entertainment, had declared bankruptcy and was bought up for pennies on the dollar.
By that time – Netflix had already moved on to their next phase in home entertainment: live home streaming.
As long as you had a compatible console that could stream the internet to your TV – you could watch movies with a few clicks of the mouse.
Yes, Netflix first took the trip into town out of the equation…
Then got rid of the trip to the mailbox!
That’s when things REALLY started happening for the company. It became
THE name in their industry – with very little competition (back then) to deal with!
It was like they were gifted the keys to the candy store as well as the cash register – helping them to amass a nearly $85 billion market cap.
And it’s one of the reasons that they may just be the biggest name in home entertainment now…
As they stepped their game up again when they started making original programming – original movies and original series – that you can’t get anywhere else but on Netflix.
And the content they’re putting out is good.
Some of the best shows out there are coming from Netflix – which has started a whole new evolution in home entertainment as companies like Amazon (AMZN) and Apple (APPL) are getting in on the action too.
Both Apple and Amazon both have online streaming capabilities – but Amazon has taken a page out of Netflix’s notebook and is also putting out original content.
It’s making for interesting times…
Even better? These companies are publicly traded.
Meaning people like you and me can own a piece of the Hollywood pie – this wasn’t something that was too common, even just a few years ago!
Allowing Joe Public the chance to get in on the action is what makes these kinds of stock choices “fun” – for lack of a better term.
It’s one thing to own a piece of the hottest biotech company or maybe a even the newest software stock – but the truth is – owning a piece of NFLX or similar company, is like putting yourself among the Tinsel Town elite…
And that’s a welcomed change from a lot of the old fuddy-duddy, stiff collared banker-inspired stocks we normally tend to lean towards.
Which is why, every once in a while, I keep coming back to NFLX…
Netflix has made it into the GorillaTrades portfolio before, and my
GorillaTrades members have benefitted. But as of late, it just hasn’t been able to meet my system’s strict technical requirements.
I keep hoping that one of these days, the company will display the kind of technical strength my GorillaTrades system is looking – for so I can pull the trigger for my GT subscribers.
It has days where it’s close…
And I’ve got to tell you, if it ever fits again – you’ll want to be there when it happens…
But, until that day comes…
I’ll be content just being a member (and a fan) of Netflix and can’t wait to see where they take things next!
“Most of Hollywood is about making money – and I love money, but I don’t make the films thinking about money.” – David Lynch