Netflix: A Surrender On DVD Model, A Tough Bet On The Internet

Media

Published: November 22, 2010 9:50 am

Last Updated: April 28, 2020 2:28 am

Netflix (NASDAQ: NFLX) will not admit publicly that its DVD-via-mail business is dying. But, its announcement today that it will offer an “internet only” product is a powerful hint that the company sees its future as a service which delivers premium content to home over the web.

Among the best evidence that Netflix has seen a sea change in its business is that the new service will cost $7.99 a month. the current subscription price for both DVD and streaming service is $8.99. The $2 is barely enough to speak of.

The company stated “the plan, which allows members to instantly watch unlimited movies and TV episodes streamed from Netflix to TVs and computers, is available now to both new and existing members.”

Netflix wildly praised CEO Reed Hastings said, “We are now primarily a streaming video company delivering a wide selection of TV shows and films over the Internet.” Hastings has shown up on a number of “best CEO” lists this year.

Hastings has a knack for seeing the future well before it happens, which is how he flanked and basically sank singlehandidly the larger Blockbuster. It will be interesting to see how he meets the coming challenge: his company’s lead in content streaming is not as large as some may think. Amazon.com (NASDAQ: AMZN), Apple (NASDAQ: AAPL), and several other large companies have moved into the business.

This is how Hastings will be tested. The battle for DVD sales was among a relative few companies. The road for Netflix has gotten very crowded and the competition is coming from the largest – and this time the most innovative – brands in the industry

Douglas A. McIntyre

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