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Netflix CEO: More Subs Equal Better Streaming Content


By : Erik Gruenwedel | Posted: 12 Jan 2010

Netflix is poised to continue diplomacy towards studios in an effort to obtain access to greater amounts of premium streaming content, said founder and CEO Reed Hastings.

During a Q&A session Jan. 10 at the Consumer Electronics Show in Las Vegas, Hastings said prohibitive licensing costs for studio fare necessitated working — not fighting — with Hollywood.

Hastings said the new deal with Warner Home Video that gives Netflix increased catalog streams and better pricing in exchange for 28-day delayed new release DVDs has very little impact on subscribers.

“Not very many of the consumers were getting [new release discs] in the first 28 days anyway,” Hastings said, alluding to typical disc shortages of major titles on street date.

The CEO said the Warner deal would not act as a template for future agreements, since he said each studio has “different” restraints when it comes to licensing content.

“We’re not trying to get into lawsuits with them,” Hastings said.

He reiterated that the marketing focus would continue to revolve around the $9 monthly subscriber with unlimited DVD rentals and streaming.

Hastings said with 50% of Netflix’s 11 million subscribers (in the fourth quarter, ended Dec. 31) streaming at least 15 minutes per month — up from 42% in the third quarter — the quest for electronic content continues.

“Pretty soon we are going to be a streaming business with some DVDs,” he said.

That said, Hastings said packaged media would continue to push subscriber growth (and DVD shipments) over the next five years, which he said was a core differentiator between Netflix and streaming-only competitors.

He expects to keep renting DVD/Blu-ray discs through 2030.

With guidance for 12 million subs in 2010, Hastings said increased membership would allow Netflix to ink content agreements (possibly with HBO) similar to its deal with pay-per-view operator Starz.

“To them we are an MSO that just happens to be [carried] over IP, instead of cable,” Hastings said. “We want to carry HBO and not bid against them. To do that, we need to get more subs so we can write a bigger check.”

The CEO said the breakthrough of 3D theatrical movies in 2009 would be different in the home due to the requirement to wear special glasses.

“I can’t see myself doing it (wearing glasses in the home) because I’m old,” Hastings said. “It really maters what the 20-year-olds do. If they get addicted to the [3D] effects, then it changes everything.”


User comments

Commented by Richard Willing
Posted on 2010-01-13 11:52:07

I strongly disagree with Mr. Hastings. I can see the studios trying to reign in Redbox in order to protect the new release rentals at video stores such as Blockbuster but your agreement is only going to increase rentals to Rebox. The sanctions put on Redbox by the three studios is only a minor inconvenience as they now obtain restricted content from other sources, mainly Walmart or Best Buy. I rejoined Netflix because of the streaming feature. In my eyes Mr. Hastings has greatly devalued his product! I no not want to wait 4 weeks to see new releases because by that time they are no more than USED movies. More agreements by Mr. Hastings with other studios to these terms will makie me highly consider the value of my membership!


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