Netflix, Inc. (NFLX) Has This Ace Up Its Sleeve in Studio Talks

Page 2 of 2

Another advantage
And there’s more. Imagine sitting at the deal-making table, waging a bidding war against Netflix. I would hate to be Amazon.com, Inc. (NASDAQ:AMZN) in that situation.

Again, Netflix simply knows more than you do. Even if it’s an entirely new license, the company can draw conclusions from a vast pool of known data. Netflix knows what a political drama is worth. It can put a price tag on Kevin Spacey’s face or on prison comedies with an all-female cast. Amazon can guess, but is far more likely to misprice any deal. Set the price too low and Netflix gets a great deal. On the flipside, Amazon will probably overpay for the content it does win.

This will be true for another few years until Amazon and others build up enough of their own viewership data to become competitive. For now, it’s a very significant advantage. Imagine if Nielsen Hldg NV (NYSE:NLSN) only handed out TV ratings to one company, leaving the rest of the industry in the dark. That’s the kind of data-driven moat Netflix, Inc. (NASDAQ:NFLX)has built here. It’s just not fair.

The article Netflix Has This Ace Up Its Sleeve in Studio Talks originally appeared on Fool.com and is written by Anders Bylund.

Fool contributor Anders Bylund owns shares of Netflix, but he holds no other position in any company mentioned. Check out Anders’ bio and holdings or follow him on Twitter and Google+. The Motley Fool owns shares of Netflix, Walt Disney, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Netflix, Amazon.com, and Walt Disney.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Page 2 of 2