Tomahawk, WI 06/10/2014 (Basicsmedia) – The ways in which we entertain ourselves has changed over the past hundred years and Netflix, Inc. (NASDAQ:NFLX) is leading the way in the latest evolution of our entertainment-related preferences. After the days of drive-in theaters to renting VHS video cassettes to cable followed by DVR, DVD and Blu-ray discs, consumers are essentially getting the option to watch stuff they like at a time of their choosing. The latest in entertainment consumption formats include HD DVD and online streaming of 4K video. Netflix remains the leader in online streaming and therefore also the winner among competitors so far.

The future, however, may not be as rosy as the past has been. As long as Netflix was merely a content distributor or provider, content owners did not see it as a threat. But now that Netflix is a producer of original content (House of Cards, Orange is the New Black, etc.) and the content owners are themselves providing online streaming capabilities, things are becoming more complex.

Numerous Competitors

From the likes of Yahoo! Inc. (NASDAQ:YHOO) who are now offering original news and entertainment content online to online streaming services such as Amazon.com, Inc. (NASDAQ:AMZN) Prime, HBO Go, Hulu, Netflix faces numerous up-and-coming competitors. Then there are newer options such as Roku, Apple Inc. (NASDAQ:AAPL) TV, Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) Chromecast, and Amazon Fire TV.

It remains to be seen whether Netflix’s recent fee hike will be palatable to its customers and whether it will be able to break into European markets such as Germany and France where it is setting shop soon but which have entrenched local players.

Improving Streaming for Customers

The biggest challenge for Netflix, Inc. (NASDAQ:NFLX) is to ensure that customers get the best experience as they watch shows and movies online. To that end, Netflix has even agreed to pay Comcast to preferentially stream Netflix videos which tend to hog the nation’s broadband infrastructure — though Netflix also argues that such deals are against the principle of net neutrality.

How much internet bandwidth does Netflix (or do Netflix users) suck? Well, it’s about one-third of peak internet download traffic in North America.

Spat with Verizon Communications Inc. (NYSE:VZ)

In the latest skirmish with broadband service providers, Netflix, Inc. (NASDAQ:NFLX) has started informing its customers when their videos are buffering that the trouble is with their ISP such as Verizon. Verizon, however, does not like it one bit. Predictably. Therefore, Verizon has sent Netflix a cease-and-desist letter and threatened to sue. This spat is likely going to go on for a long time as America has a limited number of broadband carriers and a lot of different businesses who are trying to use that infrastructure.

In the meanwhile, the April agreement for Netflix, Inc. (NASDAQ:NFLX) to pay Verizon Communications Inc. (NYSE:VZ) for preferential streaming of Netflix content continues to be implemented.

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