Tuesday, June 23, 2009

Netflix CEO Predicts Demise of Core Business

In a must-read article and interview in today's Wall Street Journal, Netflix CEO Reed Hastings predicts the ultimate devise of the company's DVD rental business beginning in 4-9 years.

The culprit? The online video business of course. And, from the company's beginnings years ago, Hastings smartly has been preparing for that day. The company already streams movies to customers as part of their subscriptions, and Internet video, of course, has been growing at a ever-accelerating pace.

For the consumer, Internet video distribution and access eventually will lead to unlimited choice and unlimited flexibility -- what you want, when you want it, and where you want it (including in the living room and on mobile devices).

And, for Netflix, Internet video distribution -- which many predicted to be Netflix's ultimate Achilles Heel -- very possibly could lead to even more explosive growth for the company in the future. The company is positioned uniquely in the marketplace to capitalize on the ultimate massive Internet video opportunity (whereas Blockbuster has faltered terribly), and Netflix's operating costs will dramatically decline since the company will not need to pay expensive snail mailing charges.