Netflix (NFLX) on DVD rental competition (quotes from the conf call)

Here's what Neflix had to say about the online DVD rental market and competition from Blockbuster:

On the market:

…the online DVD rental space… [is] the gateway to success in Internet delivery of movies… Our long-term strategy is… to…  gain size - 10 or 20 million DVD subscribers - and offer those subscribers the choice of DVD by mail delivery or Internet delivery on a movie-by-movie basis.

On competition with Blockbuster:

No one should doubt our resolve to maintain our leadership in the market we invented or our financial ability to defend that market. We believe we have the highest gross margin and the lowest operating costs of any competitor in our business…

…we are better positioned to survive the battle than Blockbuster.

…the more aggressively they compete with us for market share and the lower they price their service, the faster they drain their stores of customers and the more money they lose online

…[Blockbuster's] debt has interests and principal payments and loan covenants to meet in 2005. And they have large fixed expenses associated with operating their rental stores, which has steadily declining same-store sales and profit margins.

[These factors] will strain Blockbuster's ability to comply with its bank loan covenants. If we are right, then aggressive price competition and margin erosion will end sometime this year.

(Quotes from the CCBN StreetEvents transcript.)