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Netflix Looking for ‘Partners'

22 Apr, 2005 By: Erik Gruenwedel

A spokesperson for online rental pioneer Netflix downplayed suggestions in a published online report Friday that CEO Reed Hastings' interest in “partnering” with Amazon, or Internet portals Yahoo and MSN meant the possibility of creating online rental businesses.

Hastings told MarketWatch.com he was “open to partnering with Amazon or portals like Yahoo! and MSN.”

“Partnering can mean a lot of things,” said the Netflix spokesperson, referring to advertising partnerships. “I think he was using the term loosely.”The spokesperson said the term depended on the specifics of an individual deal. She wouldn't elaborate further.

Earlier this week, Home Media Retailing reported that Amazon was looking to create a team venture with one of the top two online rental services rather than launching a proprietary service of its own, according to an industry source.

The news comes at a time when Netflix posted a net loss of $8.8 million, or 17 cents per diluted share, for the first quarter (ended March 31), compared to a loss of $5.7 million, or 11 cents per share, during the same period last year.

The service, which posted a 53.5 percent increase in revenue, to $154.1 million, and 56 percent rise in subscribers, to more than 3 million, saw customer acquisition costs increase $2.77, to $37.89 per new member.

A drop in monthly subscription fee rates to $11.99 (four-movie-per-month limit) helped push down gross margins to 38.4 percent from 43.6 percent.

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