In addition, many of the Hollywood film studios, including Starz and Sony , turned their business away from Netflix after the cost increases. This reduced the amount of content that Netflix could stream. However, Sandoval does not see this as a long-term impediment.
“We cannot think of each studio as a monolithic structure,” Sandoval said. “You have fights between the TV guys and the home entertainment guys, and a lot of times decisions are made on whoever prevails there.”
Despite Netflix’s recent rough patch, Sandoval is confident that the movie-rental company can re-emerge.
“I don’t think you should count out Netflix.” Sandoval said, adding that, although the company messed up, its management team has been restructured and it has a strong potential to rise once again. “Reed Hastings is a smart guy,” he added.
In the first three months of 2012, Netflix streaming subscribers rose to 26.5 million. Looking at the year ahead, Sandoval said the winner in the sector will continue to be Netflix. “Nobody’s gonna take them in a year,” he said.
But Netflix’s lead in the movie-rental industry may not last forever. Sandoval warned, “Amazon is the company that Netflix should be worrying about.”
—By CNBC.com’s Madeline Laskoski
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No disclosure information was available for Greg Sandoval.