CEO: Netflix Plans to Deliver Films Via Web in 2005
Fri Apr 23, 2004 04:27 PM ET
By Michael Learmonth
NEW YORK (Reuters) - Movie rental service Netflix Inc. plans to do next year what its name has always promised: deliver a movie via the Internet. "Our strategy is to get huge in DVDs and then expand into downloads," Netflix Chief Executive Reed Hastings told Reuters on Friday. "When we get to 5 million or 10 million subscribers, eventually what we spend on postage becomes a prize for the movie studios."
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But next year Netflix plans to begin offering movies for download via the Internet, a business model that has felled many entrepreneurs in recent years. Hollywood movie studios continue to be in quandary over just how big a business movie downloading on the Web can be. Hastings said he anticipates his service will have 5 million members paying $22 a month by 2006.
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Hastings said he expects "moderate" consumer interest in downloads initially because most homes don't have Internet-connected television sets and because "DVD by mail works so well." "We're not interested in downloading to the computer," Hastings said, but rather expanding wireless connections in the home from a broadband Internet connection to the TV.
Another option would be to send digital movie files to existing set-top boxes like TiVo. TiVo CEO Mike Ramsey serves on the Netflix board. "This is something we talk about all the time, when are there enough units out there and when are there enough (movie) rights," Hastings said.
http://www.reuters.com/newsArticle.jhtml?type=internetNews&storyID=4926763