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There’s no way around it, Netflix (NFLX) is dominating in the new movie rental space. The company, which started as a rental service via mail, is now working its way into downloadable and streaming content, something that only improves upon the current business model.

Downloadable Content

Netflix originally produced its own addon to TV sets to provide streaming content from its collection of movies in it’s library. But now, a few years later, Netflix has partnered with Sony’s PlayStation, Microsoft’s Xbox and most recently, the Nintendo Wii, to deliver streaming content through the already existing game system.

Big Move

The move to tap into the video game industry was brilliant, bringing on the younger demographic that is more open to the internet and downloadable content and already owns video game systems. But, with the recent deal with Nintendo for the Wii, Netflix has the opportunity to tap into an even larger demographic. The Nintendo Wii is popular with moms and dads who have kids. Popular titles like Wii Fit, Just Dance and other products are bringing older gamers into the fray. And guess what? These older gamers have money!

How it Works

The streaming movie content is very different from Netflix’s original business model. Instead of ordering a movie online via Netflix, waiting for it to come in the mail, watching it, then mailing it back, users can now go online via a game system and watch the movie instantly. You can still pause, rewind, fast forward, etc, and do so with the use of a physical product you already own—a game system.

Electronic products like these, though intangible, are a multi-billion dollar business. And the way Netflix has incorporated it into their business is genius.

You don’t need a new physical player to plug into your TV you don’t have to pay per use like most cable companies offer. No, instead it costs just $8.99 per month for UNLIMITED movie streaming directly to your TV. Also, its incredibly easy to do, and doesn’t require you to get off the couch. A big win over CoinStar’s RedBox product.

Excellent Management

Netflix’s management knows exactly what they’re doing, and aren’t afraid to take new risks. As the streaming moving industry started to bustle, executives moved in, securing the space and locking in all the current video game console companies. In doing so, they grabbed valuable TV real estate, and knocked the socks off the traditional competition.

In summation

I like Netflix for these key reasons:

1. It markets itself - One glimpse at your friends Netflix streaming and you’ll want it too, guaranteed.
2. Good Management
3. Low Overhead - No retail outlets, no vending machines, nothing. Just the web. That’s money in the bank.
4. Recession Resistant - It grew the most when the economy sucked. It’s cheap, just $8.99 for streaming.
5. Takeover Talks - The company has been named several times for possible acquisitions. For investors, this could mean payday should it be bought out.

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