February 11, 2009 5:40 PM

The Brain Behind Netflix

By
Daniel Schorn

But Netflix itself will be a movie downloader, says Hastings, who claims he'll be able to beat the big Dot-Coms, like Apple, that have announced they're getting into the game.

"More successful than Apple, with the iPod and all of that?" Stahl asks.

"More successful than Apple, Yahoo, and Amazon. Absolutely!" Hastings vows. "Because those companies, they focus on a lot of things, you know, books and music. We think that we can be the winning firm by focusing on movies."

"Somewhere between 20 and 25 percent of investors have gone short on your stock. They're betting that downloading will eat you for lunch. So I think the message you're giving me isn't out there," Stahl remarks.

"Oh, the message, I think, that we intend to be the leading company is out there," Hastings says. "What people wonder about is: how will we do? No one really knows."

Asked if he thinks that Netflix has a chance to maintain its lead in that market, Scott Hettrick says, "When you start converting into downloads, that's a very different kind of business that anybody can play at. Not just Apple and iTunes. Google video, Yahoo video, MySpace, all the studios. Now, having said that, they will still be able to be players. They just won't be able to be as dominant in the category as they are now."

Even small companies are getting into downloading. Bruce Eisen is the president of CinemaNow, which is already up and running.

Eisen says it usually takes about an hour to download a full movie.

"But right now, for most people who would go to your site to download a movie, they would have to watch it for the most part, on their computer?" Stahl asks.

"Right," Eisen says. "You hit the nail on the head. Using it is easy. Connecting it to the TV where most people do want to watch it isn't easy yet."

Unlike most of us, Eisen has the Internet hooked up to his TV. New equipment to do that will probably be widely available in the next year or two. And yet Hastings thinks it'll be another five to ten years before downloading hits big. So his plan now is to try and quadruple his DVD customers; he just added two new warehouses in Maine and Alaska

There's a new ad campaign, and this summer, Netflix staged a traveling road show, with screenings of famous movies in the places they were set: like "Field of Dreams," on that baseball diamond in Iowa and "Jaws," on Martha's Vineyard.

Up to now, Hastings has been a big fish in a small pond. But with the downloading wave coming, his confidence about the company comes with nagging questions about himself.

"I think for sure in my first company I had a lot of self doubt. And I have some now. But it's manageable now, where it was troubling before," he tells Stahl.

Asked if he feels that he has mastered whatever it was that he was struggling with before, Hastings says, "Being a CEO is a lifetime of learning. So I would never say the word 'master.' But I'm continuing to really enjoy the learning of it."



Apple plans to boost its new downloading business by introducing iTV within six months. It's a box that will connect the Internet and TV. Reed Hastings told 60 Minutes he'll unveil plans for his own download service in January. And Netflix has posted a customer service number on its Web site.
Produced By Josh Yager

Copyright 2009 CBS. All rights reserved.
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