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Cashing in on DVD Craze... NetFlix

Boot Camp feature for Monday, December 31, 2001

Cashing in on the hottest consumer technology item of the year. Bloomberg Boot camp, a report on today's technology. DVD players... that were expensive add-ons to home theater systems just a few years ago... .have gone mainstream in a big way. With prices dropping to under 150 dollars... .and a vast library of DVD movies available... the players are now in about a quarter of all American households. And a company called NetFlix is cashing in. It's one of the real dot com survival stories... .renting DVDs online... .

"The subscription rental is twenty dollars a month for all the DVD movies you want to rent. A consumer goes to the Web site... picks the movies, we send them through the mail to them... it's free home delivery. Whenever they're done with them they send them back... but there's no due dates... no late fees... and they get to choose from over ten thousand movies that we have online. It's virtually every DVD ever published."

NetFlix CEO Reed Hastings... who hopes to see a thirty percent increase in subscribers as a result of holiday DVD player sales. He expects that will make the company consistently profitable. But Hastings is bracing for new competition... saying he expects a challenge from the behemoth Blockbuster chain ...

"Blockbuster is almost all DVD in their physical stores. Eventually they're going to launch a direct competitive service to us. You know they're not going to just sit still while we grow to be a billion dollar revenue company."

Hastings thinks he'll be able to maintain customer loyalty if that happens... the real battle will be over new customers. Bloomberg Boot Camp, I'm Fred Fishkin.