Is Netflix the Next Research in Motion?

When Wall Street loves a stock like Netflix (NASDAQ:NFLX), everyone has their beer goggles on. But did the bar tender just turn on the lights?

No doubt: Netflix (NASDAQ:NFLX) has been an awesome company executing a fantastic business model. They clearly disrupted the video industry and took out goliath Blockbuster as they burned their path to glory. However, there comes a moment in time when a fast growing company matures, competitors wage wars, and the proverbial low hanging fruit has been eaten. A few signs indicate Netflix may be entering such a stage.

Don’t Miss: The Sell-Off Continues as Netflix Loses Subscribers, Content.

First, what are the real barriers to entry for Netflix? Sure, in the short term their IT costs are far too high for most companies; but, in the not-so-distant future what’s to stop content providers from using the Amazon (NASDAQ:AMZN) affiliate model to allow tons of businesses to stream their content for a commission? Sounds crazy? Look how many people got rich selling things for Amazon and Ebay (NASDAQ:EBAY). Why not digital content? Especially when content providers will ultimately want to reduce the power of distributors like Netflix. Just ask Starz Entertainment (NASDAQ:LSTZA) which recently gave Netflix the finger in response to fees for a new content contract.

Second, Netflix is already EVERYWHERE. We’re no longer talking about a sexy upstart still a secret to movie junkies who scoffed at Blockbuster’s corporate stodginess. Netflix is now arguably as well-known a brand as Blockbuster. Their red envelopes and tablet apps are used by over 24 million paying customers in the US. That’s solid. Where’s market saturation for movie rental monthly subs? Remember: there are still people who like to grab one movie from Redbox (NASDAQ:CSTR) or Blockbuster. There are others who prefer cable movie channels, downloads from Apple (NASDAQ:AAPL) or Amazon, Youtube (NASDAQ:GOOG) or Hulu. Basically, keep perspective about how many people will be willing to send money to Netflix every month. We live in a world with a rapidly increasing number of companies aiming to get into our monthly subscription payment schedule.

There’s no doubt Netflix is an awesome service and company. But don’t lose sight of the forest from the trees. If you forget what it looks like when a Wall Street darling loses its way, look no further than Research in Motion (NASDAQ:RIMM). The company is literally disappearing in slow motion … and they sell the iconic “crackberry”! The same can happen for those bright red envelopes and apps.

Don’t Miss: These 2011 IPOs Are Underwater.