Tickers in this Article: NFLX, CSTR, AAPL, GOOG, AMZN, CMCSA, NWS
It is hard not to love a company that sees the biggest threat(s) to its business model, and then embraces them. By no means did Netflix (Nasdaq:NFLX) invent the notion of streaming movies and TV to consumers, but it looks as though this company is fully embracing the idea and taking a forceful step towards not only be relevant, but continuing to be a leader in its market.

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Here We Go Again
The idea of Netflix doing something new in terms of delivering entertainment to customers is nothing new. It is an unofficial rule of business and investment writing that every mention of Netflix longer than two paragraphs includes mention of the fact that the company's direct-to-consumer mail DVD rental business basically killed Blockbuster and Movie Gallery. Now, with Coinstar's (Nasdaq:CSTR) Red Box kiosks offering legitimate competition for physical DVDs and Hulu an emerging player in online and streaming content, Netflix is more fully embracing streaming content.

The Details
On Monday, Netflix its first ever 100% streaming subscription option. Consumers who have no need of DVDs can instead pay $7.99 a month for unlimited television and movie content - unlimited, at least, in terms of how often consumers can view it. With this adjustment, Netflix is also raising prices on the older DVD programs, including $1 hikes on the price of the most popular one-DVD and two-DVD programs.

What may be surprising to those who do not regularly follow Netflix is that this is actually not any sort of "risk" to the company at all - streaming is actually the majority of the company's usage.

Who's Next?
Of course, Netflix does not (and will not) have the streaming content business to itself. Coinstar is known to want a partner for streaming, and Apple (Nasdaq:AAPL) has been offering various types of content to consumers for quite some time right now. Likewise, Amazon (Nasdaq:AMZN) and Google (Nasdaq:GOOG) could easily view this as logical extensions of their current consumer business models.

There is, of course, also Hulu - a currently-private company that has the backing of General Electric (NYSE:GE), Disney (NYSE:DIS) and News Corp (NYSE:NWS). Going even further, there are the on-demand products offered by cable companies like Time Warner (NYSE:TWC) and Comcast (Nasdaq:CMCSA), telcos like Verizon and AT&T, and the satellite TV providers.

In other words, it is a crowded field. Making matters worse, it is not that hard to switch from one provider to another and it is hard to imagine customer loyalty stretching much beyond content availability, price and perhaps some customer service experiences. (For more, see The Successful Investment Journey.)

An Emerging Threat, or Just an Annoyance?
As streaming becomes more significant, and more people buy either internet-capable TVs or hook them through gaming consoles, laptops, or other intermediaries, the industry is going to change. The rules for how companies and content producers interact on DVDs is relatively clear, but the content licensing process for streaming content is still working itself out. Studios and distributors currently have a great deal more power and control in the streaming world and that could lead to some interesting issues in the future like studios giving privileged access to certain partners. While it does not seem too unrealistic to hold to the idea that "it will all get worked out", the process may yet be rancorous and expensive (just consider the recent squabbles between cable companies and media providers as an example).

The Bottom Line
Whether or not Netflix makes the grade as a stock (and with enormous trailing valuation ratios, most non-momentum investors may say "not"), it is hard to argue with the quality of the company. Countless companies have had a moment of glory and still gone down in flames when management chose to fight the future instead of embrace it. While Netflix has plenty of challenges yet to face, investors should feel at least some comfort from a management team that seems more than willing to embrace change and so-called "creative destruction". (For more, see The Characteristics Of A Successful Company.)

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