The Fool.com ran a four-part interview with Netflix CEO Reed Hastings last week. Here are links to all four parts:
Reed Hastings: Over the long term, I am confident of the shareholder returns because over the long term, it follows revenue and earnings. In terms of the short term, that is harder to predict for all of us. We are focused on achieving 4 million subscribers and over $700 million in revenue. We will have a $10 million GAAP loss for the year, which is really Q1, with a seasonally high marketing expense being GAAP-negative, about $17 million, and then the rest of the years, Q2, three, and four shifting into profit generation.
The Motley Fool: Talk a little, if you can, about what video-on-demand might look like moving forward as we get past that next decade. Am I downloading a movie like an MP3, or am I playing a film through my cable box?
Reed Hastings: You will be doing both. Cable systems offer VOD, at least digital cable. The penetration right there will grow. It is around 30% or 40% of households have access to VOD today. Those will climb to the 70% or 80% penetration. With satellite, it will be more of a download to the DVR model and cash in the house. With Internet delivery, it will be a mix of both; both real-time delivery for households that have a big enough connection and then download and advance more like satellite for those that don't have a real-time connection.
The Motley Fool: OK, so I didn't hear any hesitation or nervous laughter, so I don't quite know what to do with that response. I have got to ask, could you imagine a scenario where Netflix is bought out or, at the very least, merges with another company?
Reed Hastings: I can certainly imagine it because those things happen, especially in entertainment companies, all the time. There has been tremendous consolidation of entertainment companies. I think it is probably more likely as we evolve from DVD into downloading, and it may be at that point, we have 10 or 20 million DVD subscribers, and we realize we have to be part of Viacom or Disney in order to get the right, to make us successful. So I think if it is going to happen, it is more likely at that inflection point than at any other time.
The Motley Fool: Reed, final question here. Any predictions for Best Picture? Our toughest question yet.
Reed Hastings: You know, my favorite is Ray, so I am going to go with that. It only got three or four nominations, I think. I like Aviator, but I will go with Ray.
The Motley Fool: Interesting. I am an Aviator fan. I notice you left out Sideways, so I have to ask you, A. Did you see it, and B., If so, do you think it may be a bit overrated here?
Reed Hastings: I am not drinking the merlot. Yeah, I saw it. I found it cute, not fantastic. Ray, I thought, was fantastic. And Aviator, I like a lot.
I'm just glad they asked him about movie awards instead of "throttling." ;-)