The Future of NetFlix and How They are Working to Enrich Their Streaming Service

 Earlier this month NetFlix increased the price of their subscription offerings (read more here and here).

And then earlier this week, NetFlix reported Q2 earnings.  You can read the Letter to Shareholders here.  NetFlix closed the quarter with nearly 24.69 million subscribers - a 65 percent jump from the year-ago period.  Netflix expects to finish the third quarter with 25 million subscribers - 12 million taking the hybrid service, 10 million choosing streaming only and 3 million subscribing to the DVD-by-mail service.

The future of the company is clearly streaming.  In the letter to shareholders Netflix reported 75 percent of its recent subscriber gains were to the streaming only service. They also wrote, "With the rapid adoption of streaming, DVD shipments for Netflix have likely peaked. Also, in Q2 the total number of subscribers who were on hybrid plans (and, therefore eligible to receive DVDs) declined slightly from Q1 (emphasis added)."

I don't view the price increases as grab at revenue growth explicitly.  Rather I see it as a push to keep the streaming service relevant. In order for the streaming service to remain relevent (and ultimately prosper) NetFlix needs a rich, deep, and current catalog. This is clearly a focus.  Again quoting from the letter to shareholders:

We’ve spoken frequently of how we are directing savings generated from declining DVD demand into additional streaming content and marketing. During the quarter, we substantially increased sequential spending on streaming content as titles from our new content deals (discussed below) became available for streaming.…

State of the Mobile Internet

Some interesting tidbits here from Akamai (with the full report here).  My comments are in Bold. The average monthly 3G traffic is the highest for laptops (1-7 GB), followed by tablets (250-800 MB) and smartphones (80-600 MB) ->  not surprising   Online video (30–40 percent) is the largest contributor to mobile traffic volume, followed by Web browsing…

How Impactful is Verizon for RadioShack and RadioShack for Verizon

By now you've read the news that RadioShack (RSH) will stop carrying T-Mobile devices on September 14th and start carrying Verizon devices on September 15th.  If you missed it you can read more here: (Reuters, TechCrunch, Engadget). How impactful might this be for both Verizon and RadioShack?

Let's start first with RadioShack.  Despite poor results, the stock was up big on the news - closing up nearly 20 percent.  Clearly the markets think this is a positive move.

Verizon is the largest wireless carrier in the US with about 31 percent of the market - followed by AT&T with 27%, and T-Mobile and Sprint with about 12 percent each. A shift from T-Mobile to Verizon should give RadioShack access to roughly 17.6M additional households. More, the trend is positive with Verizon enjoying net subscriber additions. Verizon has roughly 85,300 postpaid connections while T-Mobile has about 40 percent of that sum (33,600 postpaid connections). This deal gives them access to over 50K more postpaid connections - an increase of over 50 percent.

About 45 percent of RadioShack's revenue comes from their mobility platform which includes postpaid and prepaid wireless handsets, commissions and residual income, prepaid wireless airtime, e-readers, netbooks with embedded network capability, and tablet computers.  Nearly 70 percent of this revenue comes from upfront commission revenue and residual income received from wireless service providers.…

Bullish on Apple? Bullish on China

One can't help but be bullish - at least a tinge - on both Apple and China.  From a recent NYT article: Last week, Apple reported blockbuster sales and profits in its third quarter, including $3.8 billion in revenue in greater China, which includes Taiwan and Hong Kong. For the first three quarters of Apple’s fiscal…