Netflix to Add Three Set-top Box Partners

Netflix CEO Reed Hastings said on the company’s earnings call today that it’s “thrilled” with the progress of its online streaming service. He disclosed that in addition to an announced partnership with LG to bring video to the TV, Netflix has signed three additional consumer electronics partners, two of them major and one of them “a small company.” LG and the other two large partners are expected to launch by the end of the year; the smaller company will launch sooner.

CFO Barry McCarthy, however, said Netflix had spent more on online delivery implementation than anticipated, prompting the company to cut its full-year per-share profit forecast. The lowered outlook sent Netflix’s shares down 13 percent in late trading despite posting a 36 percent jump in its latest quarterly profit.

The executives also said that: “Nothing about these [consumer electronics] agreements will be material to our financial results for the foreseeable future.” They did say of the digital offering that the company is “very confident it’s a positive influence for us” in terms of increasing subscribers, and that people are watching more content online than Netflix expected.

Hastings said the DVD-by-mail company now offers 9,000 movies and television shows for online streaming, though he noted this is still only available for Windows (Mac support is supposed to come this year).

Other key comments from the call:

– “Providing free access to content is not a long-term formula for profitable growth.”
– “Providing consumer access to Internet content on their TVs will require additional partnerships.”
– “Our focus as a brand is really around unlimited subscription entertainment.”
– Netflix is not interested in kiosks. It sees an advantage vs. other online streaming services because it also has the DVD-by-mail option as well as its ratings, reviews and recommendations.

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