Registered: Oct 1999
Netflix plans to deliver films via Web in 2005 - possibly through TiVo
Glad to see this may (is about to) happen!
"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."
Netflix plans to deliver films via Web in 2005-CEO
In the NEW YORK story headlined "Netflix plans to deliver films via Web in 2005-CEO" in the fifth paragraph, please read "...collecting $272 million..." instead of "...collecting $500 million..." Corrects amount. A corrected story follows:
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 Friday. "When we get to 5 million or 10 million subscribers, eventually what we spend on postage becomes a prize for the movie studios."
Money saved by sending movies directly to consumers' homes via the Web could be plowed back into buying more DVD titles to meet customer orders.
When Netflix launched in 1999, some "digerati" were surprised to find that while they could select movies they wanted to see on the Internet, they would have to wait for their selections to arrive by mail.
Netflix built a good business on the back of postal workers, collecting $272 million in revenue last year by delivering DVDs to 1.5 million subscribers. The rapidly growing online service added another 445,000 subscribers last quarter and now boasts 1.9 million customers.
The company built 29 distribution centers around the country so members in major metropolitan areas would receive their selections overnight.
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.
FUTURE OF NETFLIX
He said he's always viewed delivering movies electronically as the future of Netflix, just not its immediate future.
"From the beginning we believed in the Internet delivering movies, but we believed it would be 10 years, not two years," Hastings said. "We were right on that because everyone who got into downloading in 1998 is bankrupt now."
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.
But delivering movies on-demand electronically will put Hastings in competition with some powerful, entrenched interests fighting for consumer and advertising dollars including cable and satellite TV operators and cable movie channels like HBO and Showtime.
Moreover, five of Hollywood's major studios have formed an online movie download service called Movielink, and a sixth studio, Lions Gate Entertainment, backs Web-based film provider, CinemaNow.
Hastings said he anticipates some tough fights for movie rights with powerful industry foes, but he believes the company will be well-positioned in both DVD and video-on-demand businesses.
Dennis, I think this puts our long-standing debate on this topic to rest don't you think!
Last edited by Dajad on 04-29-2004 at 04:51 AM
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