Netflix beat Wall Street expectations when it posted fourth quarter earnings on Wednesday, signaling that the online rental service was in recovery mode following a very bumpy 2011.
While his company continues to push its streaming service front and center, CEO Reed Hastings made it very clear as to what we won't see in the coming year -- or ever -- from Netflix.
Here's a glance at a few of the topics covered during the Q&A conference call with analysts and investors yesterday:
- A-la-carte renting: Although there are certainly some subscribers who might want to pay for rentals individually, Hastings argued that there's not a lot of brand strength in the "everything for everyone" idea. Rather, he posited that you get brand strength from more precise. Hastings was also rather honest when he admitted that there are already plenty of other services that offer individual movie and TV rentals online, such as Vudu and iTunes, and that Netflix doesn't have a way of doing it better.
- DVD promotions: When Qwikster first debuted (much to the anger of just about everyone), it looked like Hastings and company were still believers in DVD sales. The reality is that DVD sales just aren't what they used to be, and Hastings explained that he expects "DVD subscriptions to decline every quarter forever." Plus, Netflix makes twice as much money off of streaming-only subscribers than DVD-only members. While the DVD unit isn't going anywhere, don't expect this service to take the spotlight again.
- Consolidating processing centers: If there are less DVD subscribers, it would seem that Netflix could make save money by buckling down on its distribution service. Hastings said that the company might consider closing some post office centers ("after the election"), but that there isn't a big threat there this year. As for distribution centers, Hastings said that there is "no practical savings to closing those" but rather the savings comes mainly from less discs and postage to buy -- not shuttering processing centers.
- Video games: Unfortunately, Hastings shot this one down.
What we might see: more original content. Of course, this depends on how well the first venture, Lilyhammer, does when it debuts on Watch Instantly on February 6.
Right now, Netflix execs were quick to defend that the original programming takes up only a "modest" portion of the budget, and it will not be much of an issue until 2013 -- unless other shows are announced later this year.
One of the more unique aspects to the way Lilyhammer is debuting is that all of its episodes will debut at once -- something that Hastings described as more in line with Netflix's brand and style.
That would be "binge viewing," as Hastings commented that viewers typically "get hooked and pour through" episodes of TV shows available in Watch Instantly.
Admittedly, anyone with a streaming account on Netflix must know this to be true. Otherwise, I don't think I would have caught on to Sherlock or Downton Abbey.
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