| « Netflix CEO Reed Hastings is Fortune's Businessperson of the year 2010 |
Nov
08
Netfix CEO Reed Hastings: "DVDs dead, streaming lives"
news, NFLX the stock, internet streaming, Blu-ray & DVD rentals, Netflix nationNetflix CEO Reed Hastings' interview with Fortune's Michael Copeland on 11.7.2010 | View the video
Highlights: On Netflix's internet streaming business advantages vs. DVD rental-by-mail business:
- Netflix is competing globally: right now Netflix just expanded instant streaming service to Canada, but Netflix plans to expand beyond that because streaming allows us to do that
- DVD rental-by-mail business is mostly about movies, but internet streaming is half TV shows and half movies, so Netflix is now competing in the TV delivery market
- for consumers, streaming is "click and watch" on the various Netflix-enabled platforms such as HDTVs and gaming consoles like the PS3, Xbox 360, and Wii [Netflix streaming is very easy, very accessible]
- on scale factors: the larger Netflix is, the more the brand is known, so it would be harder for competitors to copy, though Mr. Hastings acknowledged there will be many competitors in this market
- Mr. Copeland noted that Netflix's high degree of personalization on its web site is one of the differentiating factors of its service, but asked will streaming ever going to be about new releases?
- DVD rental business: Netflix has legally, they can buy DVD-Video media and legally rent, so their DVD offerings can be comprehensive.
- In contrast, with internet streaming Netflix has to license content, but studios usually already licensed that content to some other distributor [so new releases are difficult to secure licensing]
- Mr. Hastings said that internet stream is just "click and watch", "click and watch", and is so additive
Highlights: On competition:
- competitors usually have angles: maybe better facebook integration, ultra high definition streaming [e.g., VUDU], sports programming, or some other angle in which they compete
- Netflix is focusing on how to get better: more content, straeming smoother, the high definition picture better, Dolby Digital 5.1; to stay ahead and please more and more consumers
- On competitors such as HBO, who will not license content for Netflix: Mr. Hastings said HBO has two businesses: content aggregation vs. content production
- in content aggegation, Netflix would see HBO as a competitor
- in content production, Netflix is a customer of HBO shows and would want to distribute that content
- Mr. Copeland noted that Blockbuster is no longer a competitor due to its recently filed bankruptcy
- On Red Box (Nsdaq: CSTR) as a competitor: related discussion but in a separate video | view the video
- Red Box competes with Netflix in the DVD rental business, not streaming
- Red Box is basically a consumer market kiosks
- Mr. Hastings characterized Red Box as a supermarket vending machine business, and therefore not a threat to Netflix's streaming business
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