"Let's assemble new Netflix." says Dish TV?

OK. I had knocked the right door when I heard about the bankruptcy filing of Blockbuster back in the last year.   Looking at the swaggering stock performance of Netflix over the last two years, I thought of a potential deal of buying Blockbuster. And Dish TV has finally done it. With that, an array of acquisitions in media & cable industry continues.

I believe the impetus behind this $320mm deal is:

• Blockbuster has phenomenal collection in their library and it used to reign the movie rental market cleanly just before Netflix started to expand exceptionally.
• Looking at such potent parameters, distressed value of $320mm seems like a handsome investment.
• Subscribers do not need broadband connection to play content offered by Dish TV. This factor may become critical after AT&T and other broadband providers start putting "already announced" cap on internet usage.

If you cannot compete with expeditious NFLX, you have to build new NFLX. I will not be surprised if Dish TV has this gimmick behind the scenes.

Unforeseen rivalry for Netflix (NASDAQ:NFLX)

Since its inception in 1997, Netflix has risen phenomenally. I still remember the stock price of NFLX was around $50 in the summer of 2009- in the midst of the great recession when I joined Netflix community as one of their over 10 million subscribers. I like this concept of movie-watching and so do the Americans. Since then it has increased fourfold and is seen as one of the bullish stock on the Wall Street.

Netflix has seen many competitors in the American market like Blockbuster Video, Movie Gallery and Hollywood Video. It is solely considered responsible for bankruptcy and shrinkage of those ubiquitous DVD rental chains. And now a days, it is successfully dominating this sector of industry despite of some substantial competition provided by Coinstar's Redbox.

The most buzzed topic on the Wall Street in recent times is bubbling and bullying "Social Networking Industry". Star bankers from everywhere are following these private companies like Facebook, Twitter to help them go public and cash in billions for their banks like it happened during Google's IPO. Netflix's business model is nothing to do with social networking industry. As we studied in ECON 101, competition lures new entrants and squeezes the mature companies. And Netflix is not an exception. But the competition it is going to face, seems unforeseen and out of theory. It has deals with a number of studios like MGM, Paramount, Lionsgate, Warner Brothers etc. to stream or rent their movies after they release DVDs. Studios have earned handsome money from Netflix's expansion. But recent deal between Warner Brothers and Facebook is eye catching to me.  Why would someone take such a cannibalizing step?

• Buzzing atmosphere around social networking industry.
• Facebook has 500 millions subscribers; the way bigger than Netflix has.
• Impetus for linking yourself with social networking giants like Facebook is skyrocketing these days.

To me, it is not clear yet. But Netflix suffered immediately after this news and justified analysts' skeptical recommendations for NFLX. I have not made any valuation for NFLX, but based on my market insight I would love to HOLD for NFLX.