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Netflix Perfectly Positioned

22 May, 2006 By: Stephanie Prange

As a packaged-media/online hybrid, Netflix has stood out since its inception. Many thought it would never work. Many, Blockbuster execs included, at first thought the online rentailer had a limited, small market to exploit.

But Netflix kept on growing and expects to reach 6.3 million subscribers this year. In the process, it has created a brand and a relationship with its customers that should help it in the digital-download future.

Netflix's steady growth contrasts with the splashy announcements by certain video-on-demand concerns. Pure-play VOD players have made a considerable amount of noise of late, but they don't come close to matching Netflix's consumer awareness.

Reed Hastings seems to be cognizant of the future — noting in a recent call to shareholders that a survey shows Netflix is “compatible with a digital lifestyle” — but he's also firmly rooted in the here and now. Right now, consumers are still interested in DVD, and DVD penetration is great. In the future, more consumers may be downloading or streaming movies, and Netflix will be ready.

Netflix, like the proverbial tortoise, is content to take it slow, banking on current technology, while prepared for the next best thing.

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