Tuesday's Wall Street Journal features an interesting interview with Netflix, Inc. (NASDAQ:NFLX) CEO Reed Hastings. Mr. Hastings was amazingly candid in discussing the impending obsolescence of the company's business model:
We're sure that we're going to be buying cars in 25 years, whereas renting DVDs through the mail in 25 years? For sure that's not going to exist. That's what creates the overhang -- there's a known obsolescence. Now we can argue about whether that's 10 years or 25 years [away]. Some people probably think it's five. I think they're wrong. It's probably more like 20...If one thinks of Netflix as a DVD rental business, one is right to be scared. If one thinks of Netflix as an online movie service with multiple different delivery models, then one's a lot less scared. We're only now starting to deliver the proof points behind that second vision.
He discussed ways that the company is preparing -- investing $40 million in online delivery of movies. Hasting's realization and desire to adapt to changes in the industry may save it from the fate of titans of the brick-and-mortar rental industry like Hollywood Video, who have seen their businesses lose most of their value in recent years.
If I were a NetFlix investor, this interview would make me even more bullish on the stock.
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