Netflix, Blockbuster hold dueling investor meetings

By Sue Zeidler

SAN FRANCISCO (Reuters) - Like two movies going head to head on opening weekend, Netflix Inc and Blockbuster Inc made rival presentations to investors on Wednesday, as each DVD rental company vies to stay competitive in a converging marketplace.

Both companies are repositioning themselves to address the challenges of a maturing video rental business and an evolving online sector with giants such as Apple Inc, Amazon.com Inc and Microsoft Corp moving into the market.

At the Netflix Investor Day in San Francisco, company executives talked broadly about the push to provide online streaming, noting they expected the by-mail business to peak sometime in the next five to 10 years.

"Our key challenge is growing earnings per share and subscribers while funding streaming (online video), which should give us years of subscriber and earnings expansion," said Reed Hastings, chief executive of the Los Gatos, California-based company.

He told investors the company's online investment in 2008 and 2009 is expected to be "fairly inefficient," but noted the reason for higher spending was to cultivate better partnerships and content.

Netflix last month warned that gross margins would remain flat for the next two quarters due to higher spending for content for its online streaming service, now offered free to subscribers.

Hastings and other company executives were bullish on the company's long-term position given its successful expansion into the streaming DVD market.

"Once we're in streaming ... we can attract well beyond 20 million subscribers worldwide," he said.