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The New Threat to Netflix

Techstination feature for Tuesday, November 11, 2003

The new threat to Netflix. Bloomberg Boot Camp, a report on today's technology. The pioneering online DVD rental company Netflix has been holding its own... .gaining subscribers and making money... in the face of competition from giants like Blockbuster and Walmart. But Netflix faces a new challenge... .competition from movie studios themselves... that have started selling downloadable movies to consumers with high speed Internet connections. Netflix CEO Reed Hastings says he isn't worried yet...

"Our view is we should grow a very large DVD business. DVD is just at the very beginnings of its ascendancy. In the long term, we'll absolutely be downloading movies, offering that option to our consumers."

Maybe. The big studios... MGM, Paramount, Sony Pictures, Warner Brothers and Universal... have banded together to create a movie downloading service called Movielink. They are eyeing the growing numbers of households with high speed Internet connections. The same kinds of customers who were the first to take advantage of online DVD rentals from Netflix. Hastings says... his company will be there when the time comes...

"When downloading becomes a mainstream consumer phenomena, probably several years away"

For now... Netflix and DVDs... have the edge on pricing. Movielink charges five dollars to download recent movies... that can be viewed for a 24 hour period. Another film maker... Lions Gate... is the majority investor in another online service... CinemaNow. Bloomberg Boot Camp, I'm Fred Fishkin.