Netflix (NASDAQ: NFLX) competitors, where are you? The world’s largest subscription Internet video provider has spent the last year hobbled by self-inflicted wounds which sent its customers’ satisfaction levels plummeting and forced the company to pause international expansion plans. With millions of angered streamers eager to shop around, and with choice international markets now open for the taking, its never been a better time to pick on Reed Hastings & Co.

And yet no one has stepped up to seriously challenge the lucrative market that Netflix has left so poorly defended. Worse yet for these would-be challengers, there are signs that Netflix is beginning to recover from last year’s PR fiasco. In other words, for the companies that aim to poach a significant block of Netflix’s 23 million customers, time may be running out on the best opportunity they’ve ever had.

A Brand Tsunami

Just how big of an opening did Netflix create for competitors? Consider that before the company implemented the ill-fated price hike in July of last year Netflix represented the gold standard in customer satisfaction, leading all Internet companies in Forsee’s e-retail satisfaction index (pdf) with a score of 87 out of 100. By the time the annual survey was next conducted, Netflix had slumped to an all-time low 79, ceding its top position to fellow streamer, Amazon (NASDAQ: AMZN).

The damage to the Netflix brand spread to engulf two of the company’s top strategies, as management explained in a subsequent earnings release (pdf) that “we greatly upset many domestic Netflix members…and in doing so, we’ve hurt our hard earned reputation, and stalled our domestic growth.” Later in the statement, management said they were putting a “pause” on international expansion plans too.

Its not overstatement to say that Netflix had entered a full-blown crisis. With subscribers fleeing and satisfaction among those that remained at all time lows, the company was in no shape to resume domestic growth, let alone target new markets abroad. Since then, Netflix has been wearing a huge “kick me” sign on its back, inviting competition to oblige.

Let’s survey the field to see how the major streaming challengers have responded.

- Amazon

Amazon has shown a perplexing eagerness to lose big money on everything from free shipping, to e-readers, to now high-end fashion. But the company has so far declined to commit serious resources into the video streaming space. Amazon has indeed been adding content to the company’s fledgling streaming service that comes free with an $80 yearly Amazon Prime membership. But it has also seen its own share of PR problems, getting called out last month for “massively inflating” its streaming library size.

Amazon’s margins are already razor thin, and it doesn’t have much operating income to toss around. Still, the company should be able to find room for the $2 billion or so in annual spending that would constitute a serious challenge in the streaming market.

Maybe such a commitment is already under way, but Amazon is characteristically opaque with investors on the subject. Netflix, for its part, has said that it carries “essentially all” of the Amazon streaming content and claims that it hasn’t seen subscribers choosing the Prime service in any material numbers. Who’s next?

- Coinstar (NASDAQ: CSTR)

Coinstar’s Redbox has been the biggest beneficiary of Netflix’s stumbles this past year as it picked up many of the DVD subscribers that fled Netflix following the price hike. The company has a strong presence in DVD, having blanketed the country with kiosks and establishing a relationship with millions of entertainment-seekers. But costs forced Coinstar to implement its own price hike, to $1.20 a day from $1.00 for DVD rentals, a reminder that the economics point to online streaming as the future growth source.

To that end, Coinstar announced a partnership with Verizon (NYSE: VZ) to directly compete with Netflix in streaming, maybe as early as the second half of this year. Maybe this service will build up a formidable content offering. Maybe it will gain comparable ubiquity on TVs, gaming consoles, and other devices. And maybe it can do this at a price point that makes it a compelling choice for customers without breaking both Coinstar and Verizon’s balance sheets.

But it took Netflix years to achieve each of those objectives, even with the early benefit of first-mover advantage and the more recent benefit of scale. We don’t know the details of the coming Coinstar/Verizon offering, but we do know that the companies have a tough road to walk here.

- Hulu

In contrast to Coinstar, Hulu, a joint project by Comcast (NASDAQ: CMCSA), News Corp., and Disney (NYSE: DIS), already has a strong online streaming presence. The company’s content is focused on current season TV but Netflix’s stumbles have offered a window for the streamer to expand into the Netflix territory of movies and deeper prior-season offerings.

But Hulu has been plagued by high-level disagreements about its strategic direction, with media owners perfectly willing to sacrifice Hulu’s growth in order to “safeguard their traditional TV businesses.” It seems like the media companies have won that fight over at Hulu headquarters so aggressive expansion into Netflix turf doesn’t appear to be in the cards.

A passing storm?

We’re now one year into the three years that Netflix has said it expects the recovery from its self-generated debacle to take. In that time, the company’s subscriber satisfaction figures have bottomed out and have even started climbing again, reaching a respectable 81 in the latest e-retail satisfaction survey. Growth has also returned to the streaming service. Most surprisingly, profitability has reached the point where management canceled the “pause” on international expansion.

Netflix is busy digging itself out of a massive hole, leaving the company’s grasp on the global Internet video market the most tenuous that it has ever been. Yet the 23 million member question remains: Just who is going to step up and do something about it?

Full Disclosure: I own shares of Netflix and Disney. You can see a full listing of my current stock holdings here. Don’t forget to subscribe to stay current on posts.

Photo by loop_oh.