By Brian Solomon
Netflix stock has been on a tear for most of the last year, as investors become increasingly optimistic about the future of online video streaming as a viable and growing business model. But Netflix’s success may have put a target on its back.
On Monday, Netflix shares sank nearly 8% after a Wall Street Journal report revealed secret talks between Apple and Comcast over a new streaming TV service. The two companies are apparently in early discussions to team up to use an Apple set-top box and special data treatment.
Such an agreement might avoid problems that Netflix has had ensuring fast streaming speeds for its customers. To avoid slow buffering, Netflix recently agree to pay an undisclosed amount to connect directly to Comcast’s network. Outsiders have raised net neutrality concerns about the deal, and Netflix CEO Reed Hastings blasted ISPs in a blog post last week.
While an Apple TV hookup on the nation’s largest cable provider (one that could get even bigger if its proposed merger with Time Warner Cable TWC +0.48%goes through) still looks a long way off, Silicon Valley’s biggest tech company poses a big threat to Netflix — especially if it can get cable providers on its side. So far, Apple has focused on selling and renting digital copies of movies rather than enter the streaming space already occupied by Netflix, Amazon, Hulu, and others.
Apple shares ticked up 1.22% and Comcast shares traded flat on the day.
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