Can Netflix (NASDAQ:NFLX) Maintain Competitive Edge? Goldman (NYSE:GS) Isn't Sure

With the news Goldman Sachs (NYSE:GS) initiated coverage on Netflix (NASDAQ:NFLX), questions on the sustainability of their business model against rising competition makes their long term success suspect.

Two of the major concerns raised by Goldman was the increasing cost of bandwidth. That will either shrink margins or force Netflix to raise prices. Consequently they could either lose customers or earnings; both of which would put their share price under pressure.

With streaming appearing to be the future of entertainment over the long term, Goldman sees companies like Hulu, Apple (Nasdaq:AAPL), Amazon (Nasdaq:AMZN) and/or Comcast (Nasdaq:CMCSA) entering the fray, which could easily become a threat to Netflix going into 2011.

Goldman sees Netflix being able to compete strongly in the short term because of their lead, especially in their content deals, but over the long term it could turn into a commodity which could be copied by a number of competitors.

Goldman started coverage on Netflix with a "Neutral" rating. They were trading at $178.11, down $1.91, or 1.06 percent, as of 2:26 PM EST. Goldman has a price target of $200 on them.