Netflix CEO Reed Hasting told Bloomberg News he expects to be mailing customers DVD rentals until 2030.
There are two reasons for this:
- Some Netflix (NFLX) customers will be really late adopters to streaming technology.
- It’s going to be very difficult to get Hollywood studios fully on board with Web streaming rentals.
Why are studios so paranoid of allowing Netflix to rent their movies over the Web?
- Studios get to keep about 80% of each DVD sale right now. They fear streaming videos will cut into that (albeit rapidly declining) business.
- Licensing their films, studios earn $2 billion a year from premium cable TV networks and another $1 billion from basic cable networks. Web streaming could piss of those networks.
- Studios are paralysed with fear. They don’t want to make the same mistakes the record labels did (i.e. cave to Apple).
But here’s why no matter what, Netflix (and its competitors) will win:
- 94.8 million people are able to view Web video content now. By 2013, that number will reach 376.5 million, according to iSuppli.
- Netflix and its competitors are willing to pay-up. “We’ll become one of the networks’ and studios’ largest revenue generators,” says Reed.