Over the past year or so, Netflix stock has taken significant beating, due to the company’s attempts to initially significantly raise prices on its most popular DVD + Streaming monthly subscription plan and then to separate out the DVD business to focus purely on the streaming business. Popular outrage to such decision making resulted in some subscriber exodus and combined with the emergence of competitors such as Amazon Prime caused many analysts to proclaim that Netflix was in a death spiral.

In a short Facebook post last week, Netflix CEO Reed Hastings suggested that rumors of Netflix’s demise might be exaggerated, mentioning that subscribers viewed more than a billion hours of streaming video over the month of June. That’s a big jump over the ~2 billion hours subscribers viewed over the entire fourth quarter of 2011, not to mention that after all the attrition, Netflix still has a paying subscriber base of ~23 million, much larger than pureplay competitor Hulu Plus (~1.5 million at the end of 2011).

Could Netflix be back for real? Does 1 billion hours of streaming video indicate a renaissance?

Video streaming is clearly the trend for the future, and by focusing on this trend and reducing investments in its DVD mail order business, Netflix is in the right direction. However, does Netflix have the leverage to build on these trends? Does a 23 million strong paying subscriber base provide Netflix enough leverage over content providers (studios, distribution houses etc.) to negotiate prices down and maintain reasonable eventual operating margins. Netflix’s current approach seems to be to try to create custom content, as Reed Hastings’ excitement about Arrested Development and House of Cards indicates, although this exposes Netflix to the risk of sinking money into potentially poor viewership content.

Meanwhile, a few other players continue to work on improving their own. Amazon Prime may not currently have the breadth of video offerings that Netflix does, but a subscriber base of more than 100 million for the parent company may offer Amazon the pricing leverage that Netflix lacks, and allowing for faster shipments on e-commerce purchases might enable them to incentivize streaming enthusiasts long enough to build their content platform. Apple, while not immediately an active player might be an even larger threat. More than 250 million iTunes accounts and an unparalleled viewing experience platform consisting of the iPhone, the iPad and potentially a smart TV equip the company with the ability to become a significant player through moving from their current high-price pay-per-view online video rental approach to a monthly subscription approach. And then there is Youtube, for which it might even be natural logical evolution to offer online movies supported by the consumers’ choice between subscription and ad supported streaming. Also, Youtube is fast becoming a highly important pre-release publicity platform for movies and so would offer studios a multitude of barter service opportunities in order to gain access to the greatest variety of content possible. Netflix may have moved off from its near term trough, but continues to thus face a challenging competitive environment.