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Summary:

Netflix CEO Reed Hastings said this week that he thinks Netflix could have up to three times as many U.S. customers as the premium cable network HBO. The remarks were made in a presentation about the company’s business opportunity, which interestingly doesn’t mention DVDs at all.

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Netflix may have lost a few customers in the wake of last year’s Qwikster debacle, but it still has very ambitious goals for subscriber growth: the video service wants to eventually be two to three times as big as HBO, which would equal between 60 million and 90 million domestic subscribers, according to a presentation published by CEO Reed Hastings this week. The slide deck, titled “Netflix Business Opportunity,” is meant to explain the company’s business to potential new hires — but it also provides interesting insights into Netflix’s goals as well as its take on competitors and the changing video marketplace.

Hastings remarked in the presentation that HBO currently has about 30 million U.S. subscribers but that Netflix has a number of competitive advantages over the cable network. It’s unbundled, so users don’t need to buy it in conjunction with an expensive cable package; it offers a wider selection of content, including kids shows and anime; and it comes with a personalized UI that works on multiple devices. “Netflix USA should grow to 2-3x of HBO,” he concluded.

The presentation includes a number of other interesting tidbits:

  • Hastings painted Netflix as part of a new generation of Internet TV networks, which also include YouTube, Hulu and iTunes. YouTube gets some props for being the first truly global player, but Hastings still sees Netflix as the core innovator in this space. “Netflix is radically improving video entertainment by creating a leading global Internet TV network that others will follow,” one of the slides reads.
  • Speaking of others: Hastings still believes that the “most direct competitor for viewing time will be HBO,” but he also acknowledged Hulu Plus, Amazon Prime and “large new entrants willing to invest heavily in content, marketing and technology” as competitive threats.
  • Other factors mentioned by Hastings as long-term threats include ISP interference through bandwidth caps or net neutrality violations as well as unlicensed sites like The Pirate Bay.
  • Hastings believes that TV Everywhere will eventually transform existing pay TV providers to become “mostly a billing aggregator for many networks.”

It’s worth noting that this is the second edition of this particular presentation, if only to point out one interesting omission: the previous version, posted by Hastings two years ago, predicted that DVD shipments would continue to grow for a few more years, after which they would slowly decline. This time around, DVDs aren’t even mentioned.

Check out the entire presentation below:

Netflix Business Opportunity

View more presentations from Reed Hastings.
  1. Isn’t the presentation 15 months old – see http://www.slideshare.net/reed2001

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    1. He updated it yesterday… not sure why Slideshare still shows the original publishing date. I guess because it’s in place of the old version.

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      1. Would be nice if slideshare can do a diff of old vs. new version.

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  2. The question is, 60-90M subscribers over what period of time? He doesn’t say how quickly they want to get to that number, so it’s really hard to tell if the number is realistic or if Netflix is crazy.

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    1. I don’t think 90M is ever realistic, unless they are seriously going to require one household to have more than one subscription (and you thought the last round of pricing had a backlash!).

      There are ~110M U.S. households. Huge numbers of them will never value a service like this. At current growth rates they are barely adding anyone per quarter (yes, they touted some fancy numbers for Q4, no they didn’t really get them once you back out the freebies… let’s see what things look like after Q1 when you again back out the freebies it will tell us what really took from Q1).

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  3. Sorry I don’t believe anything Reed says. First he says he isn’t a competitor to HBO now he says he is then they say they think DVDs will be around for many many years then they say they do t think about them much anymore, then the say the will start putting more energy behind disc with Quikster then the abandon that and now the are treating DVD like the stepchild again…phew this guy is so whishie washy.

    Many people have not desire or interest whatsoever to stream Netflix. Many people continue to choose to stick with physical media and will continue to do so. It’s very cheap right now to jump into streaming as the hardware is of minimal cost but many many still decide not to.

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    1. “It’s very cheap right now to jump into streaming as the hardware is of minimal cost but many many still decide not to.” – I believe this is a maturity phase, where users simply take time to build habits and get comfortable with streaming. Same goes for streaming providers (like Netflix and others), they are testing out what features and settings users respond to. The potential of streaming is huge, just wait and see. The transition, or emerging transition of “physical media” and streaming I should say, is getting more and more user friendly and very shortly users will seamlessly become streamers.

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  4. Some People says there will be no TELEVISIONS anymore. They may be proved correct but in next 2 generations! At the sametime we cannot deny the fact the YouTube is getting 3 Billion hits every day. 48 hours of content is uploaded every minute. These figures clearly correspond to the changing habbits and demands in new dimensions. Changes do take place, but they are always based on strong pillars from past.

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