An "overconfident" Netflix (Nasdaq: NFLX) moved away "a little too fast" from its roots as a DVD-by-mail company last year, sparking an exodus of subscribers and a plunge it the price of its stock, said CEO Reed Hastings.
And, while Hastings Tuesday downplayed the threat a potential Verizon (Nasdaq: VZ) online service or Amazon (Nasdaq: AMZN)'s Prime Instant Video poses to the streaming company, he acknowledged that Time Warner (NYSE: TWX)'s HBO and HBO Go is the "competitor we fear most."
Speaking at the UBS Global Media and Communications Conference, Hastings said the two businesses are converging and that they "will compete for a very long time."
As to Netflix's stock plunge after its attempt to split its streaming and DVD-by-mail businesses, Hastings said the misstep, which cost it some $12.5 billion in market value, will be quickly forgotten.
"Streaming is the future," Hastings said.
Nonetheless, its image among consumers suffered.
"We became a sort of a Bank of America symbol, which is super unfortunate," Hastings said. "We berate ourselves tremendously for that lack of insight because it didn't need to be that way. But, you know, in three or five years, we aren't going to remember it. It's going to be: 'Did we succeed at streaming?' That's all people are going to care about in three or five years. So we are not losing too much sleep over it. We are charging ahead."
While Hastings wouldn't discuss fourth quarter subscription trends, the company lost 800,000 subs in the third quarter; he said the company was "very optimistic that we can put up very substantial growth next year."
He added that the company wouldn't quickly return to profitability, as global expansion--it's set to add service in the U.K. and Ireland next year and is in the midst of expanding its beachhead in Latin America and the Caribbean--would continue to cost it money.
Also likely to cost it: the continued push into original content like House of Cards and a revival of Arrested Development. But it's new programming that has Hastings excited.
"House of Cards is coming together great, and Arrested Development will be off the charts," Hastings said.
For more:
- listen to Hasting's presentation
- see this Bloomberg article
- see this LA Times blog
Related articles:
Verizon planning nationwide online video service
CBS chief hopeful for healthy Netflix, would make deals with Google, Apple
TW's Bewkes: Demand will drive broadband price up