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Netflix, Inc. (NFLX) Takes a Bow

Netflix, Inc. (NASDAQ:NFLX) continues to be one of the best S&P 500 stocks of 2013. Not that long ago Netflix, Inc. (NASDAQ:NFLX), Inc. (NASDAQ:NFLX) was the object of scorn for many of its own customers as well as investors. Those days are long gone. The stock is up over 100% within the first quarter of 2013, and shares now trade around $176, up from a 52-week low of $53 a share. Would you like to give Reed Hastings a bow and admit that Netflix, Inc. (NASDAQ:NFLX)deserves a round of applause?

An interesting metric from Reed Hastings was posted on the Netflix, Inc. (NASDAQ:NFLX) Facebook page—Netflix, Inc. (NASDAQ:NFLX) subscribers viewed 4 billion hours of programming. Time Warner Cable Inc (NYSE:TWC)Comcast Corporation (NASDAQ:CMCSA) and DISH Network Corp (NASDAQ:DISH) can’t be happy about these numbers.

Providing that much programming in such a short time-span is groundbreaking. If Netflix, Inc. (NASDAQ:NFLX) was a channel, it would be the most-viewed channel on cable, dish or network television. Why? Many simply cannot pay for dish or cable. Many don’t see the need—most of the good programming is available online, on iTunes, or (gasp) via torrents anyway. Network television is just downright awful. More importantly, consumers are just comfortable not having cable or dish. Many more are all too comfortable not watching anything on network television, unless it involves Peyton Manning or Tom Brady.

57 Channels (And Nothin’ On)

Comcast Corporation (NASDAQ:CMCSA) continues to take shots at Netflix. Comcast tried capping its residential broadband customers in an attempt to throttle Netflix. When that failed, Comcast introduced tiered data pricing to stem users from enjoying Netflix. None of these tactics worked—they’ve only highlighted Comcast’s lack of innovation.

Time Warner Cable Inc (NYSE:TWC) has been slightly more diplomatic—they’ve been in discussions with Netflix about how both companies can work together to deliver Netflix content. This a step in the right direction, but still showcases the lack of yet another traditional media company to innovate—simply cutting deals is not enough.

DISH Network Corp (NASDAQ:DISH) has been late to the online entertainment party and appears to be conceding to Netflix. Dish Network’s current management team does not want to compete with or run a modern web video company—they want a slice of the growing smartphone audience. This strategy may prove successful, at least Dish Network is doing more than simply playing spoiler or schmoozer.

The very fact that Comcast, Time Warner Cable and Dish Network are not producing exceptional original programming is the primary reason Netflix will continue to grow while these traditional media companies will struggle to maintain the status quo. Cable providers and Dish TV can no longer charge people more and more each month without adding value—those days are over. The most cost effective way to add value, increase viewership and create licensing opportunities is simple—tell a good story.

Hollywood carries a love-hate relationship with Netflix. They hate Netflix because they are in large part the antithesis of Netflix. Hollywood needs the “appointment factor” to be relevant—red carpet anyone? Appointment is in Hollywood’s blood. These days appointment entertainment consumption is waning fast. Who has the time or conviction to rush home to watch a program? Who does this anymore? Anybody using Netflix is not watching live TV or going to the movies. People have lives—entertainment is just a tiny sliver of their life. They are in a word, sensible. The Netflix model just speaks to this sensible, yet quality conscious consumer—the very antithesis of Hollywood.

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