Bad Day Entertainment Industry Part Three: Netflix

December 2, in television

And lest you thought Netflix would get off scot-free in this horrendous news parade, well, dig on this, ladies and gentlemens:

The online DVD rental firm’s Q1 EPS may face pressure due to higher marketing costs from an expected gain in subscribers, said Merriman as it cut its rating to neutral. The investment advisory firm noted that Netflix (NFLX) pays fees to video game console makers for the additional subscribers that it’s getting through those devices. Both Microsoft’s (MSFT) Xbox 360 and Sony’s (SNE) PS3 consoles offer streaming Netflix content. Netflix dipped 0.7% to 58.23.

So basically, because Netflix’s subscriber base and attendant revenues went up, so that’ll up their marketing costs, and for that, they’re losing stock value?

Excuse me if I remain a little skeptical–surely the enhanced revenue from the new subscribers would swamp the rise in costs?  Unless I’m underestimating those marketing costs…but I’m thinking there’s a lot more good in those numbers than bad in that equation.

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