Netflix ([NFLX](https://www.tradingview.com/symbols/NASDAQ-NFLX/)) was a darling of Wall Street for many years.  This is the epitome of a technological success story.  

A little over a decade ago, our world was dominated by video cassette rental locations.  In the United States, Blockbuster and Movie Gallery were two of the biggest.  For the better part of 3  decades, people would go to the video store to rent a film.  In the '80s it was on VHS before DVD entered the mix in the 1990s.  Both these companies were on solid footing.

Or so everyone thought.

About the time of the peak in the housing boom, a company was mailing out DVDs all over the place.  This start up was gaining some traction while offering the convenience of having a video show up in the mail without having to go out to the store.  Gone were late return fees since no other video could be received until the previous one was mailed back.  This helped to introduce the subscription model into this industry.

What most were not paying attention to is the technological advancements which were taking place in terms of networks.  The days of dial up were behind us and many carriers were upgrading their broadband.  Suddenly, streaming was becoming a viable option.

This is where Netflix was looking to position itself all along.  With the lack of action by Blockbuster and Movie Gallery, the market was wide open.  Netflix quickly became the dominant player because it offered an application that provided everyone what they needed.  It was one stop shopping.

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<center>[Source](https://time.com/3559329/netflix-to-adapt-lemony-snickets-a-series-of-unfortunate-events/)</center>

Once again, we are seeing times changing.  This time it is not so much technology that is threatening Netflix but, rather, people changing how they interact with technology.  It is opening up the door for other content providers to enter the fray.

Many discuss the idea of Disney and its incredible content collection as being a major threat to Netflix.  They also point out the fact that getting a hold of content (and creating it oneself) is getting more expensive.  All these are true statements.

There is one thing overlooked that was present a decade ago.  Back them, we were just entering the world of applications.  Only a few people had smart phones so the idea of applications were confusing.  As mentioned, one of the biggest benefits to Netflix was it provided a one stop shop.  Everything was found with just a click of one button.  This was enhanced by many remotes having the red Netflix button prominently displayed.  

Today things are a lot different.  People are accustomed to juggling many applications.  The idea of switching from one to another is commonplace.  Hence, going from Amazon to Disney to MLB over the course of a night is nothing.  A decade ago, most over the age of 50 would have been totally confused.

Warren Buffett often talks about "moats" when looking at an investment.  There is no doubt Netflix is a strong brand at this point.  We also cannot deny they make some of the most popular programming that is out there.  However, this is done at an enormous cost which, as subscription rates slow down, puts a hurting on earnings.

My feeling is Netflix is going to be one of those technologies that bursts onto the scene and leaves in a rapid manner.  I can see the decline here very quick.  As technology takes another shift, a company like that is going to face competition from areas we cannot even ponder today.

In a world of rapidly changing technology, those who once were doing the disrupting find themselves on the other side of the table.  Does that mean Netflix is guaranteed to fail?  Of course not.  However, unless they get involved with technology on another level, things are going to get very tough for them.

Perhaps they can start to offset programming costs with AI generated content.  Or maybe being one of the early entrants into the field of virtual reality will be able to fend off the wolves.

Either way, Netflix has to make a technological leap onto another level if it hopes to survive.

*This is not financial advice; only an opinion offered about the company and situation it faces.*

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