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Following the disappointing Q3 results, Netflix (NSDQ: NFLX) CEO Reed Hastings dispensed with the usual earnings report overview that accomp…

Reed Hastings
photo: AP Images

Following the disappointing Q3 results, Netflix (NSDQ: NFLX) CEO Reed Hastings dispensed with the usual earnings report overview that accompany most company releases of this sort and went straight to the e-mail questions. “We’re focused on winning back consumers,” he said, though he immediately nixed any thought of a discount for both streaming and DVD or a major marketing campaign. “We just need to manage the business as we have been, providing great content, and that’s what we’ll continue to do,” Hastings said. “But we don’t feel a need for any grand gestures.”

Hastings dismissed the notion of continuing to promote a hybrid DVD/streaming model. “The future of this business lies in streaming video,” he said. “If we were going to offer any discounts, it would be on the streaming business. But we think our $7.99 price is fair and very competitive.”

Hastings also said that the company will put on hold any additional international expansion after the UK/Ireland launch, which was announced earlier today and is expected in Q1.

With streaming representing Netflix’s long-term future, how does the DVD mail business look in over the short term? Hastings compared to it AOL’s dial-up access business, which is still a cash cow for that company, albeit a steadily diminishing one. There are fewer fixed costs associated with the DVD business, for one thing, as most of the expenses vary due to postage and labor.

Ultimately, the shift from DVD to streaming will not have that much of an impact on the content catalog’s ability to generate revenue, Hastings said. “I don’t see a shift in the catalog business; People like the depth and breadth of the catalog, whether streaming or DVD,” he said. “That’s what matters and that’s where our focus is.”

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  1. I thought you might be interested in my latest blog entry on business leadership titled “Why Netflix Lost 800,000 Customers” which appeared on the William G. McGowan Charitable Foundation website
     
    http://blog.mcgowanfund.org/  

     
    Larry Kahaner

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