FW: BusinessWeek: Don’t Nix Netflix

With all of the buzz around the launch of Amazon Unbox and Apple’s iTunes 7 (now with movie downloads), BusinessWeek says Don’t Nix Netflix Just Yet.

The new online competition has done little to change Netflix’s time table. That’s because, while Netflix execs agree movie downloads are the wave of the future, they are banking that the market for DVDs is still growing and won’t go away anytime soon. The company points to the growth of the online DVD rental market, which brought in nearly $800 million in revenues with 5.5 million subscribers in 2005 and is expected to have as many as 20 million subscribers by 2012. "Our strategy is to grow big on DVD with a big subscriber base, and that gives you opportunities for many things," says Swasey.

There are many problems with movie downloads (DRM, DVD burning, etc.), but the biggest issue is a serious lack of content. Amazon launched with less than 2,000 movies, and Apple only offers 75 (all Disney), while Netflix has 65,000 titles.