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There are several significant risks to their business model:Biggest one is lack of consumer pricing power - Presence of Amazon potentially limits this meaningfullyNetflix has eschewed stratifying it's customer base into tiers and bundles and has chosen a simple but monolithic pricing model. Media for the longest time has found the bundle a very effective way to price content - it lets you get a super-lite package at ~$30 / mo, a basic package at ~$50 /mo and additional tiers like HBO / premium movies for another $10, kids package for $5-10, etc. This was a great way to segment price sensitive customers from less price sensitive ones (especially the ones with families and kids).Netflix however started off as a complementary product, so paying $8/month at the time made sense. As cord cutting increases, as they look to expand their content offering to continue growth, especially in developed markets like the US, suddenly incremental growth requires an offering that is less like a complement and more like a substitute.The problem with this shift is that typically content costs are ~50-60% of the cable providers ARPU. So at an average ARPU of $45, thats roughly ~$25. ESPN costs ~$6 / month / sub in affiliate fees and lets assume that ESPN + news + sports is $12 / month / sub. So now they are left charging $10 / month for their "standard package" for a content package that has the potential to cost $12-15 / month.So the big question is how do you continue to profitably grow developed market users by keeping prices flat, or how do you grow revenue by growing pricing without blowing up your entire business model. 3 years ago when they raised prices by separating their DVD business from their streaming business, it caused a lot of press blowback, but it still worked for them. And they seem to be trying to do it again by introducing family plans. But a real risk will be when they are forced to change pricing to increase profitability while staving off Amazon + Sony + Hulu + everyone elseLack of supplier power - Entry of more players like Apple can stress thisIf you are basically break even in developing countries and can't really raise prices, the other way to grow profits once sub growth slows is to meaningfully reduce content costs. They can do this in a few ways:produce more originals (they are doing this already)use data to optimize content spend (they are doing this already)use scale as negotiating leverage with suppliers of content - movie and TV studios - to bring down costs or get more favorable terms.We have already started seeing them exercise more discretion in non-exclusive content pricing, and they are using data to allow them to roll off unprofitable movies and TV shows as those renewal windows come up.But new players keep pouring into the content ecosystem. Telcos and technology players entering the ecosystem is not a huge risk to Netflix on the consumer side since they are all still stealing share from the cable bundle. The big risk is that it keeps the price of quality 3rd party content inflated (the cost of a Walking Dead is multiples of the cost of Mad Men per show. Same with the record costs of The Big Bang Theory and similar sitcoms). This supplier power may move in their favor as players like Yahoo and others continue to exit the content game, and as more studios start producing TV focused content to meet demand, but there is still more money that is likely to come into the ecosystem keeping prices inflated.A launch of a streaming service by Apple has the ability to meaningfully increase content costs, or worse, take quality content off the table completely for Netflix which may force it to go after bigger risks in original content, or worse, pay for ever expensive sports content.Original Content - Hits businesses are messyOriginal content is awesome when you get it right. You own global rights, its cheaper than buying a successful content franchise, and it gives a halo to your entire operation. People who sign up to see House of Cards might become loyal customers long after they have finished with the series.But as you build scale, the economics become messy. Just ask studios that have historically averaged anywhere from 0-5% ROIs on their capital (it's hard to break these out specifically since most are part of larger media conglomerates). Value creation here quickly gets dissipated in part by the need to take large risks, and by the need to pay talent. In 100 years of cinema and TV, we are still waiting for that consistently profitable studio, and chances are, we will continue to wait.That said, this is probably the smallest of Netflix's risks, becuase unlike studios, they have a sticky subscription product and aren't at the mercy of box office ticket proceeds and DVD sales.The hidden risk - long dated content contracts already signedThe one factor that has long weighed on investors is the content liabilities on their books. When Netflix first launched, in order to get quality content (remember, large studios were calling them the Albanian army back then), they had to sign contracts at very studio-friendly terms for access to shows and libraries. As of 2015, their balance sheet content liabilities are $4.8n which isn't huge at all relative to their market cap ($42Bn). But scroll to their footnotes, and their contractual content obligations are $11Bn. (they note that $6Bn arent reflected on their balance sheets yet "as they do not yet meet the criteria for asset recognition"). For a long time there was worry that these costs would never be recouped, but given that they make $6.8Bn of revenue, this is now a valuation risk and not a systemic risk.Moreover, to keep growth, they continue to invest more in content than they amortize. They saw a cash outflow of $1.1Bn in 2015 relative to $500MM and $200MM, the years prior. So a large part of this $10Bn of obligations are still looming. Almost all of it is due in the next 3 years, and more deals continue to be added every day.So the question is given the pricing, supply and original content risks above - and given that they already have $10Bn of content obligations due in the next 3 years which likely does not fully represent their content needs for the next 3 years, do they have any margin for error when it comes to growth or profitability in order to be worth what they are today.I don't posit a view on their growth or valuation - merely that these 4 risks are the biggest risks that come to mind when thinking about Netflix today.

It’s very simple: the development of Netflix proceeded entirely out of sync with the development of the MCU films, which meant that the Netflix writers couldn’t include basically anything from the films, and also meant that the films couldn’t count on Netflix to release anything on a specific schedule.That said, there’s a bigger issue: Disney never intended to be long-term partners with Netflix. They knew, from the beginning, that they’d be unable to use any characters from the Netflix deal for three years after the end of their contract, which would mean that if the films used any of the Netflix characters during the deal, those characters would suddenly become unavailable instantly in other films if the deal collapsed. Given that the films run on a multi-year schedule, and are often in production for over a year, this meant that if the films incorporated the Netflix characters, they simply couldn’t engage in the long-term planning that the MCU is known for.Just take the hypothetical of one of the Netflix characters being referenced in Infinity War; when the Netflix deal ended, they wouldn’t have been able to reference that character in Endgame. It would have been even more frustrating if the character had appeared on-screen (or, Odin forbid, had an important role).This is what people seem to have missed about the Netflix/Disney relationship: it was never intended as a long-term partnership, but rather a detente between two open enemies. Disney knew what Netflix had done to Blockbuster and HBO, and they wanted to avoid that fate. So, Disney did what was smart: in 2012 they formed a deal with Netflix even as they began developing a competitor with Netflix (after they failed to buy Netflix outright, 3 Reasons Why Disney Should Buy Netflix (Guest Blog)) . As early as August of 2017 - two years ago - Disney made public that it would end the Netflix deal and launch what we now know to be Disney+. In the interim, they also acquired Fox (becoming the 60% owner of Hulu), and decided to eat the billions they’ll lose from Netflix income (Disney used to make hundreds of millions from Netflix. Now it will spend billions to fight it.) . They also re-acquired (for the most part) control over Spider-Man, resulting in Far From Home making over a billion dollars for them and Sony. But that deal became public in 2017; when did they start building Disney+? Well, in 2016, they acquired a minority stake in BAMTech, which provided the tech behind most of the streaming companies in the field (e.g. HBO) (The Walt Disney Company Acquires Minority Stake in BAMTech - The Walt Disney Company). In 2015 they had still been pretending they were “friend” and not “foe” (Disney used to make hundreds of millions from Netflix. Now it will spend billions to fight it.) but meanwhile they’d already been hiring the developers for Disney+.In short, the Netflix stuff - from now on - is dead to the MCU, and since the characters cannot legally be used for three years, it should be considered non-canonical at least for now.

Netflix dropped over 600 seasons of original television last year alone. Hulu has produced/ licensed less original content in a decade than Netflix puts out in a quarter.Prime has some of the most premium content going. Shows like The Boys, Carnival Row, and The Marvelous Mrs Maisel all outshine HBO. While their back catalog is full of dead weight, video is just one of the catalogs you get with Prime. Books, Music, etc… most users get the value out of free shipping alone making all the media included a bonus.All of the services have shows and movies to offer which Hulu doesn't. And many of the upcoming services will start to pick Hulu bare over the next 2–3 years as the studios launch their own platforms and the contracts with Hulu expire. So another thing the other platforms have to offer which you'd be harder pressed to find at Hulu is stability because a lot of the best stuff on Hulu comes and goes in 5 weeks and even that is subject to being pulled in the near future.