A trend of corporate world dominators- May 24, 2018

Wherever we turn there is some company that has almost total control of its industry or service. Here are some indisputable examples of corporate monopolies that affect all of our lives:

Amazon – AMZN – is the number one example of world domination. Jeff Bezos’ effect on our life is incalculable. From retail, food shopping, electronic management of the home through Alexa, to the world of postal and express delivery, there is no place to hide from Amazon.

Apple – AAPL – controls wireless communications through the IPhone.

Facebook – FB – despite all of the intrusions into our lives that we are starting to become aware of, Mark Zuckerberg has created a monster that pervades through all of our lives.

Google – GOOGL – more so than Facebook controls the internet and has a dossier on all of us.

Microsoft – MSFT – controls most of our computer desktops. If you use a computer, MSFT controls the real estate on your computer screen.

I have only scratched the surface in describing what these companies do. As much as I like free markets and abhor big government, all if these businesses have gone too far. Teddy Roosevelt would be up in arms over this if he were alive today. All of these companies need thoughtful government oversight. An impartial study is needed for us to understand what all of this means. Sadly, no responsible party is doing anything. Where are the great thinkers like Senator Daniel Patrick Moynihan?

Netflix Has arrived as next in line

Today Netflix became the world’s largest media company with a market cap greater than Disney. Does anybody doubt that Netflix has taken over the content and streaming delivery of TV and motion pictures into our homes? Amidst a sea of various content and media delivery services, only Netflix has the size and clout to dominate the world. Let’s examine:

Cable TV and internet providers like AT&T, Verizon and Comcast are all scrambling to keep their subscribers as their high fees are being attacked by competition. Who wants to pay over $100 per month for all kinds of packages that we don’t need or can get elsewhere for less money as services are unbundled? Furthermore, 5G wireless services threaten to make cable, fiber and satellite content distribution obsolete.

TV Networks like ABC, CBS & NBC are too small to compete with the large cable providers or Netflix. They provide some content, but not enough to make a big impact in a world where we can record any show we want and skip the commercials. They are all trying to provide on demand pay for view services which are too costly and offer little.

Cable TV content providers like HBO and Showtime are too small. They offer a limited amount of recycled mostly mediocre movies with only some worthwhile original content. I love Billions, Homeland and Ray Donavan, but if that is all Showtime offers, why should I pay for it? These companies are little fish.

Original content and content library providers like Disney, Turner Classic Movies (TCM) and the major motion picture companies have just so much content to offer. All are trying to offer extra pay for services. As much as I love these movies, how many times can I watch Casablanca, Citizen Kane, City Lights, The Battleship Potemkin and 8 ½ on TCM’s pay for view service?

Netflix does not care. While that the entire content and distribution business is scattered and under attack Netflix is taking over content and distribution.

1 – Netflix does not care about Cable, fiber, satellite or 5G. They will stream their services anywhere.

2 – Netflix has more original and library content than anyone. They are hell bent on outspending everyone in order to dominate the industry.

3 – NFLX is growing all over the world as if they were a restaurant chain like McDonalds or Starbucks. Reed Hastings has a long term growth plan.

4 – Profits are being plowed into growth. Just like Amazon, they can worry about the bottom line later

5 – Pricing power allows Netflix to increase monthly fees without losing customers

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Summary:

Netflix is the world dominator in providing streaming content. They are growing by leaps and bounds. No company is even close to their monopoly. Their competition is going to have to merge with each other in order to have a fighting chance. Good luck with that. Welcome to the list. Full disclosure: I own NFLX.

The only company that may have a chance – at least in China because of the trade war – is IQ. I like the chart, although there is only limited data to work with. I need to perform research on the company.

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