This is just beautiful……
Netflix (NFLX) CEO Reed Hastings gave a timeline for the company to convert its business to digital distribution: 5 years. After that, he believes the mail-order DVD business will peak and then start to decline.
“We think the by-mail business is very strong but will probably peak in the next five years. Our key challenge is growing earnings per share and subscribers while funding streaming which should give us years of subscriber and earnings expansion.”
This comes less than two weeks after the company rolled out its set-top box to good reviews.
The news here is the contrast between two companies. One doggedly hanging on to an outdated business model and being dragged into the current one and another, a pioneer in the current model already looking down the road at the next one.
Rather than buying a heap of problems at Circuit City (CC) and trying to convert its video rental stores in Apple (AAPL) store look-a-likes, Blockbuster ought to be using that energy and the money involved to try to leap ahead of Netflix in the download game. It has not ruined its brand yet and any box that streamed movies into the home would get a try by folks.
But, the longer they wait, the more the current offerings become entrenched with consumers and the harder, and more expensive, changing their behavior becomes.
But hey, Blockbuster will always have the less than 1% of the population that actually still likes going to the video store…
Disclosure (“none” means no position):None
