Netflix may have reached a financial roadblock in its plan to win back subscribers. After getting hated on for raising subscription rates and losing premium Starz content, Netflix announced a plan to up its streaming offerings, hoping to win back cred. Unfortunately, it doesn't look like Netflix has any money left for its lofty plans, reports AllThingsD's Peter Kafka. "We believe the vast majority of Netflix’s domestic streaming spend for 2012 … has already been announced or committed," a J.P Morgan analyst who had met with Netflix told Kafka. "Accordingly, we would not expect Netflix to spend aggressively or announce major new deals until management has better visibility on U.S. subscriber growth." Looks like Netflix's may be straining its financial resources.
There have been some who have been predicting this would come. The market that Netflix is looking to play in -- i.e. paying movie studios for the rights to re-sell their movies to consumers -- is worth billions and there's only so much Netflix can buy up. The big players Netflix is up against are the pay cable channels, who are seeking to defend their own subscription revenues. As Edward J. Epstein explained on Gawker back when Netflix first got into the streaming game, it's very different from simply buying a bunch of DVDs and putting them in the mail. "The problem is that the first sales doctrine does not apply to streaming or downloading DVDS so Netflix must buy digital rights, which is exceedingly expensive for new titles," he noted.