Devoted to show business and the entertainment industry

With their market getting more competition all the time, Netflix (NFLX) is turning to Hollywood A-listers to try to lift itself over the noise of the industry.

They've landed Clint Eastwood, Tim Robbins, Patricia Heaton and Maggie Gyllenhaal to partner with them on certain projects.

Others joining the company in a series of concerts offered for free across the country are Kevin Bacon, Bruce Willis and Dennis Quaid, where they'll headline the concerts at locations connected to their most well-known films.

According to executives at the company, they're using the model that HBO and Starbucks (SBUX) have incorporated by coming up with better consumer experience and original products.

"When I look back at when HBO started dabbling in original content I don't think they could tell you where it would go," Netflix Chief Content Officer Ted Sarandos said. "It has become more than a tactical differentiator for HBO. I don't know if that's where we're headed but it's a beautiful possibility."

Others aren't as impressed with the changes, as JP Morgan analyst Barton Crockett, who downgraded Netflix shares this month to "underweight," said, "I think it's good for them to get out and try to get some proprietary content. I think it does help on the margin but I don't think it's a game changer at all."
 
All of this is related to the industry becoming a commodity, which at this time it is. If someone can't differentiate, you'll just have a bunch of companies with very little profit margin offering the same products and services. It's not much of a future for any of them if that's where it all ends up.

Now I like the idea of their Red Envelope Entertainment unit. What they're doing is buying up samll films to add to their 80,000 existing titles in their DVD library. They estimate that by the end of the year they'll own the rights to almost 200 movies.

The problem there is what those movies are. Exclusive and ownership means nothing if there is no interest in them by consumers. All they are then is meaningless bragging rights. But if they can develop a nice library of exclusive films, it would allow them to ask for premium prices that could increase their margins and separate them from the pack. It would have to be a lot of good, interesting films to have them make a difference.

Make no mistake though, this is a company in for a long, rough ride. The star thing doesn't sound too productive to me. They'll have to come up with more ideas than that to bring some long-term success. If it doesn't work, the only ones getting anything out of it will be the celebrities, while Netflix will be stuck with paying their fees no matter what comes out of it.

Blockbuster (BBI) is also their most formidable foe at this time, and they rolled out their Total Access Plan and the recent mail-only plan which prices their videos below the similar plan that Netflix offers. If Netflix can't come up with some answers soon, Blockbuster could overwhelm them, as I've already heard of a lot of people that prefer them to Netflix lately, and have changed services.