They are a distributor, how do they avoid getting into that situation if not by producing their own content?

I'm by no means an expert on distribution tactics or arguing that I know more than Reed Hastings. I'm just stating if you're in that position you can get in trouble quick. To answer your question though, I would suggest making it so that the producers need you to do their distribution because you can do it far better than they could. Apple's app store might be a good example of this for the time being.

I think they smartly took advantage of Hollywood undervaluing the streaming market early on and built an entirely new market segment on the backs of their content. That wasn't sustainable. Hollywood realized (too late) that they created a monster and started shaking them down. Netflix's only real option was to produce their own content to avoid being under Hollywood's thumb.

I think Netflix made some mistakes on their journey (that whole "we're splitting our streaming/dvd business in two to help the consumer" messaging was particularly stupid) but their transition into original programming seems necessary to me, and it's paying off.

As a subscriber, I wish Netflix was as good as it was 5 years ago before Hollywood wised up, but given Hollywood did wise up not sure I can recommend a better strategy for Netflix than what they've been doing even with the benefit of hindsight (my only real criticism is they seem to focus on big prestige shows instead of cheap comfort TV like reality shows.)

The reality-style Netflix Originals seem to be coming. Last year they hired Brandon Riegg, among other notable producers in that domain.

Some of their "unscripted" content is already out: Terrace House, Ultimate Beastmaster, etc.

Yeah that seems to be the way to go to me, i guess maybe they reached the same conclusion.

HBO is a premium product, you pay for it in addition to cable. Netflix is an all in one product, you pay for it to replace cable. Don't try to be HBO, be every cable tv station.

Is HBO still a premium product? We watch it through HBO GO/NOW or something like that without cable.

All this Netflix talk makes me wish I never ever tried to "play" the stock market with Netflix. I learned a very valuable lesson thanks to them & Amazon. It's called buy & hold on companies you use & love. Needless to say, overall I agree that they've ran their business extremely well. That whole dvd/stream announcement is hardly a distant memory. Also they deserve credit for listening to their customers & trying to fix that pretty immediately.