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January 24, 2013

5 Quotes to Note from Netflix's Hastings Following 4Q Earnings

With Netflix surprising with its 4Q financials (it posted a profit of $8mln instead of the loss analysts had expected), the stock is flying high—trading up more than 37% at midday Thurs. And while cord-cutting fears have subsided, there is still plenty of concern about cord-shaving in the industry. Here are five comments from CEO Reed Hastings that every MVPD and programmer should consider.


On whether there is a potential conflict with MSOs if Netflix subscriber levels increase and tax broadband networks
: They’ve got an incredibly profitable great business doing data and that’s great for them. It doesn’t conflict with us. In fact, we like high definition Skype, are a critical application to help them drive more adoption of the higher end packages. In that way, we work really well with them.


On competing with HBO (from an interview with CNBC’s Julia Boorstin):  They're just an incredible company. And—you know, the two of us will both produce a lot of shows. It'll be a long time till we catch up with them in terms of Emmys. But we definitely look at them as—inspiration… We don't even try to compete. I mean, I'm an HBO subscriber. And you know, they—a lot of their employees subscribe to Netflix. So, you know, we both have different shows, so we both want to produce great shows. And then we're like two different channels that compete like—two buddies running.


On how marketing Netflix originals will differ from the cable network model: The huge benefit is we don’t have to advertise at 8pm on Thursday night , tune in… We get to let people know about the show and they can watch it anytime at their leisure. That lets us be much more efficient in our marketing, less focus on a specific date and time. Mostly, we’re going to be able to generate tremendous demand through our service by targeting the specific online ads on the service, the content for the people it would be relevant for… We’re also generating a lot of attention in certain cities doing a highly concentrate large scale promotion…


On Disney studio deal (from CNBC interview): Well, we’ve got so many subscribers, and continuing to get more, that we’re able to afford those deals. So we’ve got more subscribers, say, that Starz ever had. And that allows us to afford big  investments. (Hastings went on to say there are no plans to raise prices in the near term).


On the brand hit from trying to separate DVD business a year and a half ago: There’s still an echo in the grove. We’re extremely thoughtful and careful about what we’re trying to do because it wouldn’t take much to have the issue layer up again or for us to lose track. So, I’d say we’re now on probation at this point. We’re out of jail.







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