Summary:

Hulu Plus is making a run at Netflix, with a price cut announced today and broad distribution across a number of devices — including many that Netflix is already on. But at the Web 2.0 Summit, Netflix’s CEO downlplayed the competitive threat posed by Hulu’s subscription service.

Reed Hastings

With a price cut announced today and wide distribution across a number of connected devices, Hulu Plus is clearly making a run at Netflix’s subscription streaming service. But in a discussion at the Web 2.0 Summit in San Francisco, Netflix CEO Reed Hastings suggested that Hulu Plus may have a way to go before his company will see it as a competitive threat.

“Most of Hulu’s revenues are ad-supported, and we’ve actually run a lot of advertising on Hulu,” Hastings said when asked about Hulu Plus as a competitor. “Hulu Plus might grow into a competitor over time, and it will probably be good for us.”

Hastings also said that there will be plenty of room for competition among streaming video providers around the world. “There’s a whole world of Internet-connected human beings, and there’s going to be a whole lot of players, not just the two of us.”

As for its worldwide plans: Netflix got its start in the U.S. and has built a pretty large install base here, but Hastings said the company is looking to expand globally. In September, Netflix launched a streaming-only service in Canada, and today Hastings outlined fairly aggressive plans for making it available in other geographies. “Over the next three-to-five years we will try to get everywhere,” Hastings said.

According to Hastings, the order in which Netflix will choose to expand will be based primarily on two things: available bandwidth and propensity to pay for content. When comparing potential future markets, Hastings said “the BBC is the best subscription business on the planet, because it’s by law.” However, in looking at other geographies, he said that the addressable market is also important. While China doesn’t have the best available broadband infrastructure, especially when compared to more developed nations, Hastings said, “China is so big, the number of people that have 20MB broadband in China is probably more than there are in Norway.”

As for when Netflix might launch a streaming-only plan in the U.S., Hastings was a little less forthcoming. However, he did suggest that a pure streaming offering in the U.S. will probably carry the same $7.99 price tag that the service has in Canada. “Pure streaming we launched in Canada at $7.99,” he said, mentioning that the currencies are close to parity. “And you can probably expect something along those same lines.”

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