In yet another case of overeager reporters jumping to conclusions based on misinterpretations of a single original source, the recent reports of Netflix focusing its direct-download efforts exclusively on set-top boxes have turned out to be untrue. An 8-K form filed yesterday refutes that notion, saying that the company is looking at a wide range of options, not just hardware of its own, and spending between US$5 million and $10 million this year on evaluating the different ideas.
Company spokesman Steve Swasey told me today that a Netflix executive (Eric Besner, VP of original programming) “spoke out of turn” about Netflix set-top boxes, and that the company’s position on movie downloads has not changed since our last interview. The time will come for video on demand or some form of downloading plan, but thanks to existing long-term licensing deals between movie studios and TV networks, the sea change won’t happen before those agreements expire several years from now. The difficulty of moving content from the PC to the 60″ plasma TV is also holding back progress for the foreseeable future. Steve said that the next big change in the video business will be widespread adoption of HD content, and when the online model is ready for prime time, Netflix intends to be ready for a leadership role there.
None of this is new information, of course, but Netflix is sticking to its plan of keeping its online designs under wraps until the January 2007 earnings report, when more details will be revealed. And with that, Steve tried to steer the conversation onto other already-announced things.
So the lowdown here is a longwinded “no comment” and Netflix will continue to work the issues out in the cover of a full media blackout. With this extended buildup of expectations, the company better have something amazingly brilliant to present next year, or the letdown could be ugly. That wouldn’t be good for my stock, guys.