I thought it was a bit of a non-story when Netflix CEO Reed Hastings first mentioned that the company would at some point in the future offer customers a streaming-only subscription – 2010 was mentioned as a possible time frame – as frankly it’s kind of obvious that one day this will be case. The DVD format won’t last for ever, although it’s not going away any time soon, and is gradually being replaced by on-demand Internet delivered video. This week the company’s Chief Financial Officer Barry McCarthy echoed Reed’s comments, saying that a streaming-only plan will be launched in the “foreseeable future”.
However, while Netflix certainly has the distribution for a streaming-only service – Windows, Mac, set-top boxes, Blu-ray players and Microsoft’s XBox 360 games console – I’d argue that it doesn’t yet have a large enough streaming content library alone to pull in many additional subscribers.
Just 12,000 titles are available on-demand, compared with 100,000 for DVD rentals by mail. For now I still believe it’s Netflix’s hybrid offering that makes it so attractive, something that Reed himself has repeatedly talked up.
“… since a good deal of content will be available only on DVD for some years, a hybrid offering like ours is differentially compelling to consumers in comparison with any online only offering.” (Reed, Q3 earnings call 2007)