It seems these days, Netflix cannot get a break. It is getting competition from all areas as we noted here. Dish Network, the pay-TV provider is working to transform itself to a wireless mobile video company, according to Bloomberg. This means this company can challenge the traditional cable rivals as well as Netflix. More reasons the Netflix investors should be worried.
The company has spent about $3 billion on acquisitions as it prepares to launch this business. So, it can distribute contents on devices like iPad, Galaxy tabs and even Ovim. If the $1.9 billion bid on Hulu goes through, it out-bidded Yahoo and Amazon, it will simply mean that Dish Network is ready.
This video distribution industry is just getting started. It will soon saturate. The problem is that the winners will be those that own the contents and not players like Netflix, DirectTV or even Dish Networks. You need to have the assets to actually predict the future. So, what Dish Network is doing by working to buy Hulu is the best model. It will give it asset and at least it can fall on something.
Yet, if Disney, Sony, Paramount Pictures and the rest decide to keep all out of their priced assets, this industry can collapse. It is close to Spotify depending on the record labels when one day they can create a competing product like Spotify. Of course, they may not like that -they may just focus on their core business. However, do not discount what it will mean if such an idea comes up.
The loser in this mobile video distribution is certainly Netflix because it is being squeezed from all angels. It cannot raise price, yet, it is paying more to get contents. It may have to open itself for sale, now, it has some values than wait until it is finally destroyed.
For Dish Network, playing a second fiddle does not help. DirectTV is still the industry leader and the perception of cheap products in Dish Network has not helped. The company must come up with better products if it wants to break the ceiling which DirectTV continues to elevate.