Reed Hastings, CEO, Netflix, Inc. (NASDAQ:NFLX)
That would be upside Rich that we would not expect. That they would trump existing contracts. But what’s been great for Netflix is the general idea of the internet as utility, open to all, not for discriminatory use has really taken hold. Of course the shift we’ve seen over the last year around perceptions on entitled to is amazing to see him just well once. There appear to be on the edge of an acting title to and generally codifying the idea that at least in the US, the internet is a utility for broad social good and wide open access and that overtime, if it happens, will significantly insulate us from any accelerating tax for interconnection. So, I imagine we would likely move out the current deals and that’s what’s in our plan.
David Wells, CFO, Netflix, Inc. (NASDAQ:NFLX)
Maybe I can add just on the financials Rich, we don’t talk about the specifics of a deal but we continue to be very happy with the shift to managing our own CDN. The percentage of our expense on streaming delivery continues to be quite modest relative to content.
Reed Hastings, CEO, Netflix, Inc. (NASDAQ:NFLX)
Mark and Rich, why don’t we hit one more question each then we’ll wrap-up.
Mark Mahaney, RBC
Let me field one to Ted then. Ted, just give us an update on the Disney content. I know some Disney content will be streaming into that key Canadian market this year, but going forward, I think there is a very large library of Disney content that will coming on. Just some color about how big that opportunity is, or how much content that is and what kind of impact you think that can have in terms of filling up the fillet 40:35 of whatever of offerings to families on Netflix.
Ted Sarandos, Chief Content Officer, Netflix, Inc.
You need to — any other studio, we’re excited about the 40:42 Pay One opportunity with Disney because those movies are not just movies, they are amazing family content that gets watched over and over again, forms great loyalty with our subscribers, and it is a real trust brand for parents as well.
So, we really have been expanding our relationship with Disney, even with the Pay One win, though, which I have been fairly dismissive of with other studios, including coming on in Canada this year and then it to the US next. I think that is going to be a very long term relationship, as global as you get, in terms of [inaudible] of Frozen this year all over the planet so it is very consistent with our desire to be more and more global with our programming.
Richard Greenfield, BTIG
Last question from us, although it will be a two-part question. The first piece coming on the DVD front. Obviously, DVDs still supplies a lot of profit, David, to your financials. Just curious, given the comments of at our wall had today their DVD business seems to be flowing pretty precipitously as they look into ’15, how do you think about the DVD business and the sustainability of those profits, and then, just a final wrap question for Reed, you’ve been so vocal on the ComCast – Time Warner merger and the dangers it poses, are you increasingly confident that this deal gets blocked?
David Wells, CFO, Netflix, Inc. (NASDAQ:NFLX)
Rich, let me take your question first. On the DVD, I continue to think it is going to have a long tail. In 2013, we lost 1.2 million of our DVD subscribers. In 2014, we lost 1.1 million, so slightly less. The margin has held steady for two years if you look at the contribution margin for the DVD business. So, it is going to continue to decline. We don’t have any illusions on that. But we think that there is a lot of people — for a lot of people, in rural areas and other cinephiles where the DVD makes sense for them and at $8 a month, it’s a pretty inexpensive add-on. So we’ll just continue to provide great service for these folks that really want it.
