In the same way that the iPhone helped sell more Macs for Apple, Netflix CEO Reed Hastings told the audience at the NewTeeVee Live conference today that Netflix can help sell more broadband and broadband services. We’re a killer app for broadband data, said Reed. GigaOM founder and interviewer Om Malik explained it in more Twitter-friendly terms: “Netflix is the iPod of broadband.”
Here’s Reed’s logic: Customers don’t upgrade to faster broadband for email or web surfing, they do it for high-bandwidth online video services like Netflix’s streaming video. Over the next 5-10 years, Internet video technology will expand cable’s broadband relevance to customers, said Reed.
It’s a symbiotic relationship. The more connected devices, the more potential customers for the video-streaming service. Over the past year Netflix has been racing to launch its video-streaming service on a variety of connected devices, including, most recently, Sony’s video game console, the PS3. (Reed joked that the Internet Wi-Fi toaster was its next killer device.) Netflix is going to try to wire up every device with its application, he said — Wi-Fi is just a $10 part. “We’re making great progress there,” said Reed. (That may or may not include Nintendo’s video game console the Wii, as Reed wouldn’t comment on Om’s heckling about a Wii/Netflix partnership).
But Netflix is still banking on its mail-order business, and will continue to do so in the short term. Reed said that the company is spending $600 million a year on postage for its mail-order business, a figure it expects to grow to $700 million. But clearly, over the long term, broadband is the future for Netflix. Reed says that the company is expanding internationally and that in some international locations it will launch with its streaming video business only.