Reed Hastings made a big bet a few years ago on streaming video. They setup the streaming site and the infrastructure on Amazon’s cloud then worked through all of the growing pains and figuring out how to charge for it till it was a profitable little business. They’ve since grown in to be the future of their business. It was brilliant, a BUNCH of people including the Harvard Business School published case studies on their efforts (I used it in my MBA).
Sunday, Netflix doubled down on that original bet. They separated their shrinking DVD Mailing business in to another company so they could focus on what they believe the future is… streaming. That gives them a bunch of flexibility with the vestigial organ that is the DVD business. Now they could sell it to Blockbuster or Redbox, they could sell some of the shares off of it while it’s high, etc… It may make life a little less useful for YOU in the short term, but this is a good business decision for them. That’s why while I understand the many many customers who are leaving, it’s short-sighted for investors to jump ship. There’s just too much value in owning the market leader in an industry (streaming, internet-based television) that will almost certainly grow. I actually bought shares in a publicly traded company today (not an index fund, not a private company, not a real estate investment) for the first time in a couple years today.
Note: I do recognize that the rumors that Apple may be entering the TV business as a troubling fact for Netflix. I’m not saying it’s a 100% safe bet, but that’s not how investing works is it?