• by David Goetzl  @dgoetzl, February 29, 2012

No one can accuse Reed Hastings of thinking small. The Netflix CEO reiterated his company’s estimate that it just might double or triple HBO’s distribution, which could mean 80% of U.S. homes have a subscription on the high end. Content flexibility and branding are two reasons why.

“Our brand is broader,” Hastings said this week at an investor event. “HBO’s strength, just like Oxygen’s strength or Discovery’s strength, is that they stand for a very particular type of content. That’s what you need to do on a linear feed, but if you’re a personalized service without a linear feed, you can be multiple types of content for multiple demographics.”

Another reason for the potential spread is Netflix’s lower price -- at $7.99 a month -- for its streaming service, compared to HBO, which comes on top of a cable bill. Hastings also cited Netflix’s more personalized features.

If Netflix makes good on its estimate -– and Hastings was clear to note it is an estimate -- it could have 60 million to 90 million domestic customers. It now has about 25 million, compared to HBO’s 28 million. 

Looking ahead more broadly, Hastings suggested that as broadband expands globally, a mass of new Internet networks will emerge with immense growth opportunity. Current linear networks will also head in that direction, similar to HBO Go and WatchESPN, as the nature of TV hardware changes.

“Just as broadcast networks became cable networks essentially, the current cable networks –- HBO, ESPN -- they’ll become Internet networks,” he said. “And they’ll all have incredible user interface with apps. The TV you buy in the next couple of years is basically like a giant iPad. Think of an iPad that’s stretched up against the wall.”

“It’s got apps, some kind of touch or pointer or voice or gesture -- all the different new modalities for natural user interface,” he added. “An incredible period of innovation with smart TVs and an incredible period of innovation with new Internet networks [will be] created.”

Hastings said Netflix is working to make its user experience better on smart TVs. He said there is still a slight delay between the time a person clicks the Netflix start button and when the service launches. 

Internet-based networks offer an opportunity to be more transformative than linear networks. A chance to “do something bigger and broader -- whether that’s social or because it’s global or because of the content production -- than anyone’s done before,” he said.

Hastings suggested Netflix could partner with a cable or satellite operator down the line to distribute Netflix as part of their package. Netflix may no longer be perceived as a threat. Plus, it has a large assortment of original content that could benefit the operators. (Which would make it easy for consumers to write a single check.)

“A long time ago, there was the fear that we were an Internet MSO or just an unknown,” Hastings said. “The more that we just focus on movies and TV shows -- and we’re doing more and more original content -- the more HBO-like. And they know how to deal with HBO. Many of them would like to have a competitor for HBO and they’ll bid us off against HBO in various ways.”