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Netflix maintains streaming video focus as growth continues

25 July 2008 12:59 by Rich "vurbal" Fiscus | 1 comment

Netflix founder and CEO Reed Hastings is pleased with his company's performance over the last quarter. The company increased in both revenue and subscribers, just as they have in every quarter but one during their short history. His primary focus during a conference call today was expansion of their streaming video offering.

Hastings repeated sentiments voiced at the company's annual Investor Day earlier this year. Despite the lack of growth in the DVD rental business he predicts that the company's percentage of the market will continue to increase, resulting in overall growth for Netflix over the next 5-10 years.

He plans to get Netflix streaming support built into Blu-ray players, game consoles, internet connected DVD players, and standalone set-top boxes. He mentioned the success of the Roku set-top box and partnership with Microsoft.

"It's been a huge hit with strong reviews, strong sales, and great subscriber satisfaction," he said of the Roku box. "Roku purchasers are streaming video to their TVs and getting great value from the unlimited streaming portion of their Netflix membership."

He added, "In the future Roku boxes will support other internet video content and migrate from being a Netflix-only player to a general internet video player, which will increase Roku sales and therefore the number of TVs we can stream to."

He also indicated that more details will be released soon with regard to their partnership with LG Electronics and mentioned that they have another partner whose name hasn't been announced yet.

He also spoke briefly about the recently announced deal to add Netflix streaming to the Xbox 360, saying "The Microsoft partnership means that with Microsoft's late fall software update to over 10 million domestic Xbox 360s Netflix members can stream movies and TV episodes to their TVs as long as they are also Xbox Live gold members."

He said the Xbox Live deal is exclusive, meaning PS3 owners won't be getting a similar feature. He also said company executives believe it will be their "only exclusive deal in any segment."

On competition from kiosks, he said "The rise of DVD rental kiosks in supermarkets, while new competition for us in the short term, is a bigger competitor for new release focused video stores, and should accelerate store closures over the coming years. In addition the rise of DVD rental kiosks shows that the DVD franchise is still very strong with mainstream consumers."

He sees kiosks and mail delivery operations to both continue growing, while traditional brick and mortar rental outlets will decline.

One area where he was notably short on detail was the variety of titles available for streaming. While he pointed to the increase from 2,000 titles when the service first launched to over 12,000 today, he didn't give any specific estimates for how quickly they'll be adding more titles.

The biggest criticism of their streaming service to date has been a lack of selection. This is especially true of popular titles and new releases. While 12,000 titles sound like a lot, if you consider the number of movies and TV shows released every year it's actually a very small number.

Permalink to this article | Topics: Blu-ray Consoles Home Theater Online video

Review: The Roku Digital Video Player (12 March 2009)

Netflix by Roku box goes open source (25 September 2008)

Netflix resumes shipments following outage (16 August 2008)

Xbox 360 downloadable content generates large revenue (6 August 2008)

Netflix begins charging extra for Blu-ray rentals (2 August 2008)

Blu-ray to outsell DVD by 2011, says Sony Pictures (2 August 2008)

LG bringing Netflix-streaming Blu-ray player (31 July 2008)

Microsoft announces deals with Netflix, NBC-Universal (15 July 2008)

Roku bringing more content providers to set-top box (4 July 2008)

CSNY documentary to test simultaneous theatrical and VOD release (23 June 2008)

Netflix criticized for streaming strategy as set-top boxes sell out (3 June 2008)

Netflix CEO predicts streaming video will double subscriber base (29 May 2008)

First set-top box for Netflix streaming service goes on sale today (20 May 2008)

Netflix announces more set-top box partners (22 April 2008)

Netflix to raise price for Blu-ray access (22 April 2008)

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Discuss this article!
barryware (Newbie) 29 July 2008 8:35
I knew about the Netflix / MS deal. I am a Netflix subscriber and also own a 360 that I use as a Media Center Extender. I did NOT know that you needed an Xbox Live GOLD membership to participate in the direct streaming of video to your console. Might be better off purchasing the 100 dollar gizmo from Netflix than pay MS a subscription fee. [ + quote]