Apple TV:  Apple dominating the living room shouldn’t be ruled out.  Bloomberg discusses how apple could eventually launch an App Store for the TV that will have the same impact that it did for the iPhone.  The biggest issue currently standing in Apple’s way is that it doesn’t have the rights to distribute programming the way it desires.  As studios remain tentative to jeopardize their relationships with cable operators, they have spurned Apple’s proposals for a subscription based services.  Ultimately, Apple is in a decent position to implement an a la carte video distribution model in the future.  [Bloomberg]  

The roll out of Apple TV and Google's intentions getting involved in this business will force analysts to revalue the futures earnings growth of $NFLX it currently trades at a PE of 55 which is very high but this is because they have no other peer group to compare the earnings too. So once competition enters there market it will be revalued to a realistic PE ratio. The book value of NFLX is the neighborhood of something like $2-3 so this is very much over valued.

Here are some listed stocks in the USA that don't have any peer group to compare there earnings becuase of a monopoly or they are the only listed stock in that market in the USA

MELI Brazilian Ebay- PE 79-- so if you want to exposure to this market you would have to pay up

BIDU- only pure play on Chinese internet Search PE 89

NFLX- PE 56- Most expensive Video store in the world—The failure of blockbuster was a huge positive for them but the future earnings are going to be clipped, when apple and Google enter this market

The chart to the left show MELI BIDU NFLX these are stocks that have no peer group to compare there earnings too. The Chart to the right is MSFT (PE 11) GOOG(PE 20) YHOO (PE 22) were their is actually a peer group were you compare the earnings too.

The bubble will pop in these high PE stocks once the free market gets its hands on it. The only exception may be BIDU because the definition of a free-market economy is an economy where all markets within it are unregulated by any parties other than those players in the market. This exactly the opposite of the market in which Baidu operates in because they have a monopoly on the Chinese search market for the government regulation of the content in there search engines. Since Baidu operates in a controlled economy it can likely sustain such a high price to earning ratio but in the event of china opening up there economy to a unregulated market on competition will realign the valuations were it trades today.