Netflix Pauses on Video Downloads

Snail-mail DVD delivery pioneer Netflix Inc. is pressing the pause button on plans to offer a movie download service through the Internet. During the company's third-quarter earnings call yesterday, CEO Reed Hastings said Netflix's online snafu is due to its inability to ink equitable licensing deals with movie studios. However, Hastings says Netflix will continue to invest in online delivery infrastructure so the company "will be ready to launch when the content climate begins to thaw." Netflix added 396,000 subscribers in Q3 to bring its total to 3.59 million. Third-quarter revenues totaled $174.3 million. The upside for cable: skittishness from the studios in online video distribution gives MSOs more time to ramp their VOD offerings and craft complementary online strategies before players like Netflix bring a solution to market. The downside: the situation may signal an intensifying desire by studios to 'go direct' to consumers through the Internet and bypass alternate distribution channels. That's a pipe dream of course. The studios will come around to ink online partner deals eventually.

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