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Netflix: Blu-ray Players Will Replace DVD Players
But the online rental service says its number of Blu subscribers is now "relatively small.:

By Swanni
Washington, D.C. (October 21, 2008) -- Netflix CEO Reed Hastings said yesterday that he believes that the Blu-ray high-def disc player will ultimately replace the standard-def DVD player.

Hastings made his remarks in a Wall Street analyst call following the release of the company's third quarter report.

"As prices come down, people who even are just DVD watchers are going to get a Blu-Ray player because the prices are low and it upscales the DVD very nicely," Hastings said. "So we really pretty optimistic, as prices come down, on Blu-Ray players replacing DVD players."

Best Buy recently reduced the price of its Insignia-branded Blu-ray player to $199 and other manufacturers are now offering players below $300. Most analysts believe that prices will fall even further when the holiday shopping period begins next month.

Despite Hastings' upbeat forecast on Blu-ray, the Netflix executive also revealed yesterday that he expects that roughly 500,000 of its 8.7 million subscribers at quarter's end will be Blu-ray owners. He called that number a "relatively small percentage."

But Hastings, whose company recently added a $1 monthly surcharge for Blu-ray subscribers, said the high-def disc is starting to pick up steam.

"Player prices are falling; They (Blu-ray makers) are starting to get some volume," he said. "It’s the same cycle that we really have seen on DVD."

In addition to offering Blu-ray rental discs via its web site, Netflix has partnered with LG Electronics to introduce a Blu-ray player that permits instant viewing of Netflix movies over high-speed Internet connections. (However, Blu-ray movies are not yet available on the LG/Netflix service.)

"Part of our long-term strategy is to get our streaming client embedded in as many Blu-Ray players as possible. LG Electronics was our first such partner and we’ll announce more Blu-Ray partnerships as they are ready for consumers," Hastings said.

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Phillip Swann is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.

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