Netflix: Is It Built on a House of Cards?

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Sept. 23 (Bloomberg) -- Wedbush Securities Michael Pachter, KeeneOnTheMarket.com's Andrew Keene and Bloomberg's Julie Hyman discuss the outlook for Netflix with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Why buy a dvd when you can buy a subscription to netflix for eight dollars per month and watch all the shows together?

Is the dvd business really means full enough to matter to the bottom line?

The other question, not just someone going out and buying a dvd.

That is a way but also what happens with the show a couple of years down the line.

Do they sell the licensing rights or give them up over time?

It is that it does not own the show in perpetuity and does not get the revenue from dvd.

You also wonder if they do not own the show, i guess they license it for a certain number of years.

If it becomes such a big hit, then take that show and bring it to another area?

Sure.

They original content you are talking about is still just a minority of the content.

It is what has gotten a lot of attention.

Most of the content is movies.

-- it has gotten a lot of attention.

When you are talking about the naysayers on netflix, and there are a lot of them, usually that is what they are pointing to.

Talking about a stock near a record.

It has said it will pay at least $6 billion over the next five years for content.

Says that is the minimum.

Not giving an exact number of what it eventually may pay.

That is not counting the future content deals.

For a stock trading 190 seven times forward earnings, still some uncertainties here.

With this company be smart to start producing content in-house or getting a portion of the content that is just there's so they are building and amassing their own library?

It is a smart strategy to acquire and retain subscribers but something exceedingly difficult to do.

I am not talking about subscribers.

Just content.

I am saying developing your own content is a great strategy to keep strategists and attract them.

Showtime just really started having success in the past 15 years.

Stars had one series that made any sense at all.

A different business model from what they are used to doing as well.

Netflix has no skill set to do it.

Taking the bold step of doing iron man.

Fortunately they own the characters and got a first hit on the first one.

It is really hard to do.

Netflix does not own first.

They would have to come up with creativity, which is hard to do in hollywood and has to make the right that.

Really hard to do.

Ask how long is the deal?

They told me they have the rights to show them two years after the last episode.

Right now committed to fund season two.

They do have the right to renew for a third season.

They did not tell us what the price would be.

I think enemies will drive the price.

I would imagine so.

This is a variable.

It is great if they can keep acquiring new subscribers.

It adds a lot to revenue potential.

The cost of the content, because it is successful goes up, send it chips away at the potential profit.

I would not gore amazon to -- i would not expect amazon to lowerure them out.

What are you looking up for netflix?

It has gone one way, straight up.

Trading north of 300. today a huge keyword versatile day.

I think they're being nominated for 14 of them.

It refers to about $20. time high reversing, closing on the low.

I think it is possible a short- term top is in for netflix.

They have to compete against amazon.

A lot of competition.

Content cost keeps going up.

I am looking at the options that expire october 25. my trade is to buy this.

This is known as a put butterfly.

On this trade, 200 $90 per one lot.

I can turn that into 90. i also have a range where i make money.

It is hard to get short stocks like this.

I want to make sure i have a great reward.

I think there will be fires around this level.

Interesting ideas from andrew keen.

Competitors could be interesting.

It does not matter who one or

This text has been automatically generated. It may not be 100% accurate.

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