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Summary:

Not only is Netflix aware of the competitive threat Hulu poses, but it is committed to fighting back by offering its own mix of exclusive and non-exclusive TV content. As a result, expect even more deals that let Netflix stream full seasons of TV shows online.

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Bring it on: That was the message Netflix CEO Reed Hastings had for Hulu Plus during his company’s second quarter earnings call. “We take it seriously as a direct competitor,” Hastings said.

Not only is Netflix aware of the threat Hulu Plus and its wide library of network TV content across multiple consumer electronics devices poses, it seems committed to fighting back by offering its own mix of exclusive and non-exclusive TV content. In his management commentary on the quarter, Hastings is quoted as saying:

“In terms of streaming content, we are rapidly expanding our TV shows available for streaming and since our last call we have added thousands of TV episodes from new deals with Fox, MTV Networks and Warner Television. These shows include all seasons of 24, Futurama, Lie To Me, The Chapelle Show, Nip/Tuck and Veronica Mars, and in a few weeks all seasons of The Family Guy will be available to stream as well. We see TV shows as equally important to our franchise as movies.”

By getting access to full prior seasons of content from the networks, Netflix is upping the ante for subscription TV services by boosting the number and the quality of shows available in its library. As a result, Netflix has the potential to beat Hulu Plus on its own turf, through a wide range of TV content.

But Netflix isn’t just stopping at the ability to offer back seasons of the same TV shows that are also on Hulu Plus; instead it plans to push further into Hulu’s territory by taking away potential content partners and signing exclusive deals for TV content. “At this point we can start to afford some major TV shows and movies on an exclusive basis, and plan going forward on a mix of more-expensive exclusive content and lower-cost non-exclusive content,” Hastings said in his management commentary.

Other interesting tidbits from the earnings call:

  • Hastings said that the Relativity Media deal, which will give Netflix exclusive access to first-run content, won’t provide a material step-up in streaming licensing costs until next year, when the film distributor starts delivering titles for the service.
  • The company downplayed a drop in average revenue per consumer, as more of its new signups were for its $9 a month, one-DVD-out-a-month plan. “if prices decline rapidly toward that one-out plan, that means steaming is catching on with consumers,” Hastings said. Which, all things considered, is a good thing.
  • DVD shipments continue to grow, but they’re growing less quickly than Netflix management has anticipated. Netflix forecasts 2013 as the year DVD shipments are expected to peak, but slower DVD growth could mean that peak might come sooner than expected.
  • Netflix will have a new user interface available on the PlayStation 3 sometime over the next three months — and that new interface will not require a disc to play streaming movies, as the current implementation does.
  • Netflix management doesn’t see any evidence that consumers are cutting the cord or downgrading their cable service due to the availability of its streaming service.

Related content on GigaOM Pro: Slow and Steady, Netflix Pulls Ahead in Streaming Video (subscription required)

  1. This might mean an opportunity for Internet video if Netflix is seeking original content.

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  2. Myself along with 2 other friends have either cut or downgraded cable service because of Netflix/Amazon/Itunes/Hulu streaming offerings.

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  3. onecallednick Wednesday, July 21, 2010

    I’m one of the $9 a monthers and I love it. Never owned cable, never will. Also, in that second bullet you said steaming and not streaming. I could go for some steaming right now, come to think of it.

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  4. We’re in the process of canceling our satellite TV since Netflix streaming will pretty much satisfy our needs. And I know others who feel the same. Movies and TV shows for that price compared to $70 for DirecTV? Not a hard choice to make.

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  5. [...] is planning on creating an app for the PS3 to replace its current disc solution and is working on new deals to compete better with Hulu Plus. [via] Filed in: Content Providers, Industry Buzz  Tags: Netflix [...]

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  6. [...] just one part of the company’s attempt to take on the Hulu Plus challenge; according to NewTeeVee, Netflix are seeing slowing DVD subscriber growth as more users turn to streaming.  Netflix CEO [...]

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  7. [...] just one part of the company’s attempt to take on the Hulu Plus challenge; according to NewTeeVee, Netflix are seeing slowing DVD subscriber growth as more users turn to streaming.  Netflix CEO [...]

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  8. i_will_stay_with_netflix Thursday, July 22, 2010

    I will stay with Netflix, given the big library of movies/videos Netflix has. (just discovered recently that all great documentaries of PBS are available on Netflix.)

    but when Netflix will start to offer on-demand movies, for the new released ones?
    I don’t want to buy other boxes to enjoy them at home!

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    1. Roku box has Netflix, plus Amazon VOD and lost more. A great deal.

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  9. Juergen Lorenz Thursday, July 22, 2010

    We just increased our plan from 2 DVDs to 3 DVDs. That’s mainly for English language movies, because streaming does not support Closed Captioning. And without C.C. we miss too much of the dialog, especially with BritCom shows. Hey, we are getting older. So we use streaming mainly for foreign films, which all have subtitles by default.

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  10. [...] Netflix’s Hastings said Wednesday that the DVD-by-mail rental giant is “rapidly expanding” its catalog of streaming TV shows, having recently inked deals with Fox, MTV, and Warner Television for shows like “24,” “Futurama,” “Lie to Me,” “The Chapelle Show,” “Nip/Tuck,” and “Veronica Mars,” with full seasons of “The Family Guy” on the way, according to NewTeeVee. [...]

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