The on-again-off-again game from Netflix continues...in its Q3 earnings call Monday, CEO Reed Hastings again went in the other direction: the company plans to allow users the ability to rent movies over the Internet but he won’t give any more details until the next earnings report in January.
“Again, I know it is frustrating for us to dangle this out and not really complete the sentence, but we will complete it next quarter on this call for you,” Hastings told analysts who pressed him for details on Monday’s earnings conference call according to a SeekingAlpha transcript. Previously, Hastings has argued, “The reality is the current Internet movie delivery services continue to show no growth in traffic. Nada.’’
Did Amazon’s Unbox announcement change Hastings’ tone? What about the growth of video downloads on Apple’s iTunes? He says no since those services are primarily targeting download-to-own instead of the $8 billion rental market. He added that Netflix has been “patiently’’ learning through research the best way to approach rental downloads. This won’t be cheap.
The company plans to increase spending on digital downloading from less than $10 million this year to more than $40 million next year, said CFO Barry McCarthy. As more movies are rented online, times will get even tougher for chains, Hastings said. He predicted that they will close 5 percent to 10 percent of their stores next year.
For now, Wall Street will let Hastings be mysterious since Netflix just reported better-than-expected third quarter results and gave a bullish outlook. That sentiment will quickly change if Hastings isn’t able to deliver what he’s promised.