Netflix soars, investors cheer…then Web service crashes.


It’s been a heady few months for Netflix, the DVD by-mail company fast becoming a online video streaming service. Yesterday, its third quarter numbers again beat Wall Street expectations as it revealed it is now the third largest video subscription service behind Comcast and DirecTV with nearly 17 million subscribers. Wall Street analysts at UBS and Oppenheimer, already in love with the company, upgraded it on Thursday morning helping to push shares to a new record high of $174.40 before closing at $172.69. To think you could have bought the stock for $47.56 exactly one year ago.

Analysts were m0st excited about the potential for Netflix’s video streaming-only service, which will do away with the heavy expense of delivering DVDs to subscribers homes across the country. In the words of Netflix Chief Executive Reed Hastings (here pictured):

“Three years ago, we were a DVD-by-mail company that offered some streaming.” “We are now a streaming company, which also offers DVD-by-mail.”

And then came the crash. Netflix’s streaming service crumbled on Thursday, as  reported earlier by CNET. The company told CNET it is aware of the problem and is working on it. Akamai, Netflix’s primary content delivery network for streaming videos, said there were no issues with its service (er, thanks guys!).

The service came up shortly after, but the damage had been done. Hopefully, this was a one-off; but, as Multichannel News reported yesterday, Netflix accounts for 20 percent of peak U.S. Internet bandwidth traffic between 8pm to 10pm, according to a study by Sandvine.

from Summit Notebook:

Redbox: Paving the way for “G.I. Joe” rentals

You thought that maybe that giant Redbox machine in your local food mart, offering $1 DVDs, was simply a low-cost way to share a movie night with the family.

Its REALLY a (nearly) free pass for guys to grab testosterone-rich, leave-your-brain-at-the-door, man-cinema, where stuff blows up reaaal gooood.

You know: "Predator" or "Conan the Destroyer." Or something else starring Govenor Arnold. Redbox President Mitch Lowe said the low price allows people to explore their taste universe...

from Summit Notebook:

SanDisk’s Eli sings the Blu-Ray blues

The flash memory business may be suffering its worst slump ever, but SanDisk CEO Eli Harari is carving tombstones for other businesses.

The No.1 endangered technology, Harari said at the Reuters Global Technology Summit on Tuesday, is the Blu-Ray DVD. Because the discs don't work with smartphones, which consumers are increasingly using to watch video, Harari says their days are numbered.

He did not give a time frame for this extinction, though he did note at one point that the average period of time it takes for a new technology to render an existing technology obsolete is five to seven years.