March
27
Hastings Talks Netflix
The WSJ probes Netflix CEO Reed Hastings on how his DVD rental service plans to survive the download future (subscribers only). Here's a sample:
WSJ: Why does Netflix face a lot of questions from analysts about the sustainability of its business even though you're showing strong growth?Hastings: That's easy. We're sure that we're going to be buying cars in 25 years, whereas renting DVDs through the mail in 25 years? For sure that's not going to exist. That's what creates the overhang -- there's a known obsolescence. Now we can argue about whether that's 10 years or 25 years [away]. Some people probably think it's five. I think they're wrong. It's probably more like 20.
WSJ: So it's a question of when, not if, DVD rentals will go away.
Hastings: That's exactly right. If one thinks of Netflix as a DVD rental business, one is right to be scared. If one thinks of Netflix as an online movie service with multiple different delivery models, then one's a lot less scared. We're only now starting to deliver the proof points behind that second vision.
WSJ: You've started letting some of your subscribers watch movies from your Web site. How seriously are you pushing into Internet-delivery of movies?
Hastings: We're taking it pretty aggressively. We're investing about $40 million into it this year. We feel that that's the appropriate size investment, given the size of the market. If you overinvest in a market, of course, a lot of the money is wasted.
If you underinvest, then someone else can get ahead of you. We'll be up to 5,000 films by the end of the year, open to all of our subscribers.
WSJ: Five thousand movies is still a lot less than the 75,000 you offer Netflix subscribers on DVD.
Hastings: Remember when DVD launched in 1997, and then we launched in 1999, we only had a thousand titles. It grew as the ecosystem grew.
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