More Netflix thoughts
I posted a few months ago about an article I'd read on the web, which claimed that on peak evening weekday hours in the U.S., 20% of Internet traffic was made up of Netflix streaming video packets. The usual run of folks piled on, with very wise and learned-sounding commentary about dark fiber and lying with statistics.
Here's a statistic I've been keeping track of for the last 60 days: making 10 attempts on 10 different weekday nights, I was able to stream Netflix content successfully on only six of the ten nights. On the other 4 nights, I was not able to get any Netflix content to stream.
I could explain my technical setup (small town, AT+T DSL, PS3), but it really doesn't matter. This is a service I pay for and its effective uptime is only 60%.
Let's take an analogy. Coke (KO) is a company that sells beverages. When I buy a 24 pack of Coke cans, I get 24 12-oz cans of Coca-Cola, which I drink.
Under the Netflix current business model, I would buy a 24 pack, get 14 cans of Coca-Cola, and 10 cans of, say, rat urine or some other useless substance. The cans of rat urine would be unmarked and look the same as the other cans, and I'd have to open them one at a time to find out that they were no good.
What do you say, folks? Under those conditions, would KO be a strong buy? Or a sell?
I do not short stock, on principle, because in order to short a stock you are making a short-term bet - in other words, not only do you have to have conviction that the stock will go down, but you also have to have a timeframe and a catalyst in mind, and that's usually too hard for me.
But I'm actually thinking of making an exception for Netflix, because I can see the catalyst - it's on my TV screen right now: a big red error message with the Netflix logo pasted on it. It basically says, "NETFLIX CUSTOMER: NO MOVIE FOR YOU." So instead of watching a movie, I'm typing this blog entry. Bad business.