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As Netflix continues its shift away from by-mail DVD rental and towards a streaming-dominated model, it will be hard-pressed to maintain its current margins. So says Wedbush Morgan analyst Michael Pachter, who believes that Netflix will have difficulty keeping up its current pace of growth beyond the next year or so.

According to Pachter:

“We believe that Netflix will be challenged to grow at its current pace for more than another year, and we expect its premium valuation to contract,”

Even though Netflix will save money on postage and other logistics as fewer subscribers use its DVD by-mail service, the company will have to drastically increase its spending on content acquisition if it plans to keep its streaming service competitive and current.

Is Pachter right here, Insiders, or will Netflix be able to keep up its torrid pace of growth AND its margins in the coming years?

(via Home Media Magazine)

8 Responses to “Analyst: Netflix Won’t be Able to Sustain Current Margins Much Longer”

  1. Visitor [Join Now]
    Vernon Dent [visitor]

    “We believe that Netflix will be challenged to grow at its current pace for more than another year, and we expect its premium valuation to contract,”


  2. Visitor [Join Now]
    Danofive0 [visitor]

    I have netflox, 4 at a time. And love it. I hope they do not change it much. I think it will be years down the road for this streaming bit to really be any good. As it is now, it sucks. No CC. are SDH for the hard of hearing. Keep them coming in the Mail.

    • Visitor [Join Now]
      Mike [visitor]

      There is a way to bring up subtitles on some streaming movies…it is under Audio Options (I think) that shows up on the menu just before you select Play. I just found this out recently myself.

  3. Member [Join Now]

    I hope they don’t change over either. I also get 4 dvds at a time and being the only way to get internet where i live is the very expensive satellite service i have no way and no use for streaming movies

  4. Visitor [Join Now]
    Aaron Relton [visitor]

    Has anybody seen yet that Google plan on starting an online offers service? It is said to rival Groupon and will be very fascinating to observe how it develops. It has been argued however in some blogs that Google’s greatest competitor is local bulletin boards inside community buildings or leisure centers etc.

  5. Visitor [Join Now]
    Liz [visitor]

    I just put my Netflix on hold for 3 months. The price just went up, I get 1 @ a time and don’t do streaming, except on my computer. I THINK I will end up spending less if I just get them from Red Box and my local Library (which is free) than I do using Netflix. I rent movies for the new ones, so streaming doesn’t work for me. What Netflix has on streaming I can usually see on TNT, USA or other TV channels.
    That’s my 2 cents worth. :-)

  6. Visitor [Join Now]
    Latoyia Cypret [visitor]

    Everyone who rags on the Academy Awards need to get over themselves. All of these movies this year are brilliant and no one should be disappointed in the winners. If the movies bore you to tears maybe you should skip movies with taste and go watch Madea Goes to Jail and call it a night.