NetFlix looks beyond standard DVDs
Netflix Inc. is looking beyond the day when it will only rent DVDs through the mail to movie buffs. In fact, Netflix, No.18 in the Internet Retailer Top 400 Guide to Retail Web Sites, is working towards the day when it will expand into providing renting movie downloads to customers with web-enabled DVD players and other digital recording devices.
Movie studios and producers are moving into making films and DVDs in high definition and in the process expanding how movies and films can be purchased and downloaded by online shoppers, Netflix CEO Reed Hastings told investors and attendees at a recent technology conference hosted by Credit Suisse and First Boston.
The move into DVDs that can be downloaded to web-enabled digital recording devices will take between five years and 10 years, Hastings says. But to prepare for the shift in technology and consumer buyer behavior, Netflix is investing between 1% and 2% annually of its total annual revenue into research and development. “We’re investing to be ready,” he says.
By 2012, Netflix could have as many as 20 million subscribers downloading movies and renting DVDs, Hastings says. In 2006, Netflix expects to sign-up at least 5.6 million subscribers and to achieve revenues of about $940 million in 2006, up 36.6% from projected 2005 revenues of $688.1 million. NetFlix is expected to release its final 2005 and fourth quarter financials on Jan. 24.
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