We caught up with Netflix CEO Reed Hastings at the movie rental company’s event where it awarded a $1 million prize after a contest aimed at improving the accuracy of movie recommendations. He spoke about his hopes of working with Apple on the iPhone, the possibility that YouTube will beef up its movie service, and the future of the DVD.

Reuters: What will Netflix subscribers gain from the improvements in the recommendation system?

Hastings: It’s doubling the quality of our movie recommendation and that helps our subscribers get more enjoyment from movies. Because more often they love the movie they watch. More often the movies recommended will will turn out to be movies that you love. If you watch a couple of movies and don’t like many, you start to watch (sports and other programming). If every movie is incredible, you start to watch more.

Reuters: Netflix video streams on Microsoft’s Xbox Live system. What about the PS3 and Wii?
Hastings: Eventually we want to be on all the game consoles, all the Blu-ray players, all the Internet TVs. So we are working in parallel with all of those efforts. Currently our Xbox deal is exclusive and we haven’t characterized it more than that.

Reuters: Any plans to work in partnership with Apple and the iPhone?
Hastings: it’s something that’s likely to come over time. But nothing in the short term. (With) movie watching, we are not focused on mobile yet, but (instead) on the TV, on Blu-ray and on the video game consoles. We will get to mobile eventually, including the iPhone.

Reuters: What of Youtube’s potential movie service?
Hastings: I think there will be a lot of competition in this market: Hulu, Apple, Amazon, Youtube, Blockbuster. Internet video is a huge opportunity. And there will be a lot of people engaged, and that is going to be great for the consumer. All of us are going to innovate and compete with each other and provide more and more value to the consumer.

Reuters: How far along are we on the transition to all digital video watching?
Hastings: There will be people doing DVD-by-mail in 15 or 20 years, so I think DVD will last a long time. Our best guess is that DVD will peak for us in 5 or so years. But it is continuing to grow. And the streaming is exploding. So we are getting nice growth in the DVD side and huge growth on the streaming side.

Reuters: What do you make of Blockbuster’s store closing plan?
Hastings: Blockbuster and Redbox really compete on  doing the inexpensive new releases, and we are much more the streaming and the catalog. Their closings don’t really benefit us. It will benefit Redbox more than it does us.

Reuters: Have you been approached about an acquisition or partnership?
Hastings: We don’t comment and any acquisition prospects.

(Photo: Reuters archive)