Thick Profit Margins Shore Up Netflix, Inc. (NFLX)

Is it a Dog-Eat-Dog Scenario with Redbox?

So here comes Redbox scrambling for Netflix. While the DVD and blu-ray kiosk is said to be an emerging rival, is it even a match? Not in any way. Netflix management has long groomed the firm in the online streaming business and has professed intentions of ruling out its DVD component. Redbox’s domination of the DVD market will not hurt Netflix, primarily because of the simple fact that it is not part of the DVD business anymore. Its shift from the traditional content viewership to online streaming subscription has been well and good, providing its millions of subscribers the best customer service possible while maintaining healthy profit margins for its future growth. So, Redbox making up 44% of the overall DBD rental market is not really much of a big deal for the online streaming king. And even with the announcement of Redbox launching its new Redbox Instant online streaming service, it has still got a long way to go before it could ever take down Netflix.

Healthy Prospect

With more and more people gaining interest in online-streamed entertainment, Netflix is up to lay its groundwork for future subscriber growth. Redbox, Amazon, and Verizon-Coinstar may be in the running, but the firm’s thick profit margin makes it a cut above any of its rivals. While its partnership with Warner Brothers is already bringing in hundreds of millions of dollars, Netflix just has to sustain its focus on its strong US customer base to catch the investing world by surprise with its consistently high takings.

The article Thick Profit Margins Shore Up Netflix originally appeared on Fool.com and is written by Josef Ray Dagatan.

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