The paper repeated some key points Hastings has made it the past, but also included a number of noteworthy new insights, including some data points on how Netflix spends its money.

Notably, Hastings said that Netflix is now spending over $2 billion a year on the licensing and creation of content. The company is spending another $350 million a year on improving its service and apps, including improvements to the streaming quality and customer service. And it is spending over $450 million per year on marketing in all of its markets around the world.

Here are some other key highlights of the paper:

On the future of TV

People love TV viewing, but they hate linear TV, including DVRs and cable VOD services, argued Hastings: “The linear TV channel model is ripe for replacement.” Stepping up to replace it are apps from companies like Netflix, HBO and ESPN, which deliver programming to multiple screens.

Technical advances, including 4k streaming and personalized advertising, will speed up the transition from linear TV to app-based on demand programming, and TV Everywhere will make it easier for cable networks to transition into this new world. And eventually, all of this will fundamentally change how TV is delivered, he said:

“Eventually, as linear TV is viewed less, the spectrum it now uses on cable and fiber will be reallocated to expanding data transmission. Satellite TV subscribers will be fewer, and mostly be in places where high-speed Internet (cable or fiber) is not available. The importance of highspeed Internet will increase.”

On Netflix’s focus

Hastings repeated in the paper that Netflix doesn’t want to compete with cable, but just wants to become one more channel — or app — for consumers to choose from. That also means that the company will focus on a few key areas, and for example not venture into ad-supported programming:

“We don’t and can’t compete on breadth with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.”

For Hastings, this isn’t just about doing the things at which Netflix excels. It’s also about offering consumers a clear idea what they can expect from the service, which is key to get them to tune in to what he described as “moments of truth”:

“Those decision moments are, say, on Thursday 7:15 pm or Monday 2:40 am when our member wants to relax, enjoy a shared experience with friends and family, or is just bored. They could play a video game, surf the web, read a magazine, channel surf their MVPD/DVR system, buy a pay-per-view movie, put on a DVD, turn on Hulu or Amazon Prime Instant Video, or they could tap on Netflix. We want our members to choose Netflix in these moments of truth.”

On licensing

Hastings also shared some details about the company’s approach towards licensing, which has been shifting more and more towards exclusives. Data is guiding decisions on what to license, explained Hastings:

“We might pay, for example, $200,000 for a 4 year exclusive subscription video-on-demand (SVOD) license for a given title. At the time of renewal, we evaluate how much the title has been viewed as well as member rating feedback to determine how much we are willing to pay. How many similar titles we have is also a consideration.”

He didn’t mention it by name, but this reliance on data could be one of the reasons why Netflix decided to not renew a big licensing pact with Viacom. The company revealed earlier this week that its partnership with the cable programmer is about to expire in May. Netflix is now in discussions with Viacom to license individual shows instead.

The paper also pointed out that Netflix has fundamentally changed the licensing of TV shows in particular:

“It wasn’t easy for cable and broadcast networks to syndicate serialized storytelling to others, and we’ve pushed the price up considerably.”

On HBO

Hastings has long maintained that HBO is its biggest competitor. The company revealed Monday that it now has more domestic subscribers than the cable channel, and Hastings repeated in the paper that he wants to significantly outgrow HBO:

“We have more content, more viewing, a broader brand proposition, are on-demand, on all devices, and are less expensive, so we estimate that we can be 2 to 3 times larger than current linear-HBO, or 60-90 million domestic members.”

However, Hastings isn’t ready to count HBO out yet — and in fact argued that the competition from Netflix will actually help make HBO better as well:

“While we are passing HBO in domestic members in 2013, it will be several years before we are peers with them in terms of Original programming, Emmy awards, and international members. It wouldn’t be surprising to us if HBO does their best work and achieves their highest growth over the next decade, spurred on by the Netflix competition and the Internet TV opportunity.”

Hastings was asked about password sharing after Wedbush Securities analyst Michael Pachter had estimated in a Bloomberg story from Monday that as many as 10 million people may be watching Netflix without paying, suggesting that the company may start to crack down on the practice.

Hastings said that sharing passwords with extended family members is “not what we would consider appropriate,” but he added that most of the account sharing would happen within the immediate family — something that Netflix wants to make easier with the introduction of both personalized profiles as well as a more expensive family plan.

Personalized profiles that will allow family members to maintain separate queues and get more personal recommendations will launch internationally within the coming months, the company announced Monday. Netflix has been testing these personalized profiles since the beginning of the year, and Hastings said Monday that the response has been positive. “The key use case is between kids and parents,” he explained, adding that parents have told the company in the past that their experience is suboptimal.

The company also announced Monday that it will launch a new $12 a month family plan that will allow users to stream up to four devices at a time, as opposed to the current two-device streaming limit. However, the company doesn’t expect a huge response to this offering, with Hastings saying Monday that he expect fewer than one percent of subscribers to jump on the offering.

“House of Cards fav quote: ‘look at the bigger picture.’ Over the last three months, you all watched over 4 billion hours on Netflix. Next up, some real monsters from Eli Roth…”

Hastings has in the past occasionally taken to Facebook  to reveal milestones like these. Most recently, he touted more than one billion hours streamed per month last July. However, that post got him in trouble with the S.E.C., with regulators investigating whether the CEO of a public company can release data like this on Facebook. In the end, the S.E.C. gave in, clearing the path for Hastings to drop further milestones on the social network.

Let me say that again: a door-to-door salesman.

I think that’s a first, for me at least. While lots of internet services market heavily — television ads, radio spots, billboards, leaflets and print — I have never come across this sort of feet-on-the-street approach before. Trying to prevent customer churn is one thing, but this just has the ring of desperation about it… and comes as another piece of anecdotal evidence that suggests Lovefilm’s feeling incredible pressure from Netflix.

When Netflix launched in the UK and Ireland a year ago, it was a clear who would be in its sights. Reed Hastings and his team may say they are targeting the bigger pay-TV services, such as Rupert Murdoch’s Sky, but their first hurdle was undoubtedly trying to surpass the Amazon-owned rival.

Lovefilm has been competing where it can, particularly in trying to head Netflix off at the pass by signing exclusive content deals with Universal, Fox, and others. But it’s also trying extremely hard to defend itself by stopping customers from fleeing: when I tried to unsubscribe a while back I realized it was one of those irritating services that forces you to phone up to cancel (a surefire sign that I will never go back).

And you can’t blame them: it would take a brave gambler to bet against the American company right now.

Netflix is storming on almost all fronts, from its acclaimed original programming, to its balance sheet: Wall Street loves it again, as it finally recovers from the farcical series of events it inflicted upon itself in 2011.

And that is having an impact on its rivals.

Former Lovefilm boss Adam Valkin told me last year how the company had feared Netflix since 2004. And though Netflix still has some way to go — it’s still unclear whether Netflix is making inroads against its real targets, the broadcasters, and claims almost dubiously high membership numbers across the British Isles — it definitely has some crucial competitors, at least, running scared.

Facebook COO Sheryl Sandberg praised the deck in a new GQ magazine story about Netflix, saying:

“It may well be the most important document ever to come out of the Valley.”

The GQ article is a good read for everyone interested in Netflix and its CEO, who apparently doesn’t own any flashy furniture, but does keep a bunch of chickens and goats in his backyard. But it also serves as a good reminder to take another look at that Netflix company culture deck:

The Securities and Exchange Commission responded by telling Netflix and its CEO that they are in hot water for violating rules about corporate disclosure. The company said this week that it has received a Wells Notice, meaning Netflix and Hasting are under investigation by the SEC.

So what exactly did Netflix and Hastings do to trigger a federal securities probe? The answer is that they used a Facebook page with more than 200,000 fans to share the news instead of a more traditional method like a press release. In theory, this means that they didn’t give everyone a fair chance to react to a “material event” that affected the share price.

This is silly, of course. As Mike Isaac of All Things D notes, if you want to spread news then the world’s largest social network is a pretty good way to do so. And given the viral nature of the internet, the news will spread far beyond Facebook almost instantly. This should easily meet the legal requirement that companies use a well-read news or wire service or “any other non-exclusionary method.”

What has happened here is that the SEC has gotten caught up in technicalities rather than looking at why we have the rule in the first place. That rule, by the way, is a good one — every investor, and not just insiders, deserve to know when something important happens at a public company. And, in this case, Netflix and Hastings respected the spirit of the rule.

In the bigger picture, the Netflix incident shows how regulators can fail to grasp the massive changes in our communications and transportation infrastructure. Just as mid-20th century taxi laws are ill-suited for the age of car services like Uber, it doesn’t make sense for the SEC to pretend we’re still in the age of the fax machine. As Bloomberg notes, companies like Tesla are using everything from Twitter to company blogs to communicate with investors. The SEC will only lose credibility if it keeps trying to stuff this digital genie back in the bottle.

(Image by DM7 via Shutterstock)

However, Hastings ruled out similar partnerships for further expansion into continental Europe. Netflix hasn’t said yet where it wants to go next; the company has a policy of returning to global profitability before it enters any additional foreign markets.

Hastings and Netflix CFO David Wells got some pointed questions about their international plans during Tuesday’s call, with some analysts apparently feeling that the company should slow down on its plans abroad and instead focus on improving its domestic performance. Netflix only added 1.16 million domestic streaming subscribers in Q3 of 2012, and the company lowered its forecast of total subscribers for 2012 from 7 million to 5 million.

The picture is looking a little better abroad, but questions remain about several of its new markets, with one analyst even asking whether the company is considering to pull out of select countries in Latin America. Wells dismissed that idea, and the company’s VP of Finance and Investor Relations Ellie Mertz instead explained how Netflix is working with local banks to make sure that people can actually pay for its service.

Wells also had some interesting insights to share into the role exclusive content is going to play for Netflix. Next year, exclusive content will still only amount for “certainly less than 10 percent of hours viewed, maybe less than 5 percent of hours viewed” on Netflix, he mused. But in the long term, the expectation is that the majority of content on Netflix will be exclusive content, he said, adding that it turns out to be a great investment: “Some exlusive content costs more, but it’s worth more because it is viewed more.”

Overall, the tone of Tuesday’s call was somewhat sobering. Netflix missed another subscriber goal, and Hastings said that he was tired of making excuses. “It is what it is, and we are moving forward,” he said during his closing statement.

Seconds after Dorsey and Zuckerberg put up their news, it was picked up by casual readers who shared it and tweeted it. Technology media (including blogs) also picked up the news and published it as classic news posts. Some of us added analysis, but in the end both casual observers and publications were doing the same job — they were amplifying the news, spreading it across various mediums. There is a blurring of the line between what is news and what is a tweet, photo or a blog post. In other words, it is a kind of mosh pit of data and information — and that means the role of media is changing.

A reporter’s job for the longest time has been to find information and report it. This is what we have called news. Sitting in the media box at the baseball stadium and reporting scores and providing updates for a wire service was as much “news” as reporting on the Watergate scandal. And up until the end of the 20th century, the sources of distribution were pretty limited — radio, newspapers, magazines and television.

That in turn meant that newsmakers had to go to media outlets in order to share their message and get it amplified and reach those they wanted to reach — call them constituents or the target audience. With the rise of the social web, that has changed. Blogs, Tumblr, Twitter, Facebook, Instagram and other such platforms have made it easy for news makers to go direct to their constituents. So what is the role of today’s media person? In addition to reporting news, I think picking things to amplify is also important. Back in the day, news people made choice by deciding which stories to write. Today, we have to adopt a similar rigor about what we choose to share and amplify. In sharing (on Twitter or even re-blogging) we are sending the same message as doing an original news report. The easy thing is to share or reblog everything, but by being deliberate about it, we are essentially “editing” and telling the world: “this is how I see the world/this particular beat.”

One of the few people who has it figured out is John Gruber of Daring Fireball, who essentially has a very Gruberesque-view of the Apple economy. Similarly Jason Hirschhorn (formerly of SlingBox, MySpace and MTV), who operates the MediaReDefined email newsletter and a Flipboard channel, presents a very nuanced view of media industry by sharing what he thinks is relevant. They are not classical media people, but they are probably more prototypical of the “future media.”

Andrew Sullivan, a career journalist, is one media person whose link sharing, blogging and actual writings are pretty consistent with his world view and what he considers is important news. When Sullivan writes a longer report or a deeper analysis, you know it is important and worth paying attention. When Gruber has gone deeper, it has more than likely been worth paying attention to, whether you agree or disagree with them.

I am not saying we all have to be like them, but it is important to remember that in the future when Dorsey, Zuckerberg and Hastings are no longer an anomaly, the media person’s role is no longer just reporting news. Reporting through sharing and curation are going to be vital roles for us to play in the future.

“It’s really about low-cost shipping, but why is video in there? It’s kind of a confusing mess.”

Hastings has in the past dismissed Amazon’s video subscription efforts as well, and tends to point instead to HBO and its HBO Go service as its real competitors. That’s despite the fact that Amazon has been ramping up its content library in recent months. Earlier this month, Amazon singned a deal with Epix that will give its subscribers access to the Hunger Games, Avengers and other movies previously exclusive to Netflix.

There have been rumors in the past that Amazon would spin off its video service from Prime to turn it into a full-blown Netflix competitor, but the company has repeatedly denied any such plans.

“Do you really need 100,000 titles? I mean, really?”

Davis said that he doesn’t want to compete with Netflix on catalog size, but rather have an HBO Go-like approach with fewer titles that matter more. Except you probably won’t see many TV shows on Redbox Instant either, as Davis hinted at movies being the core focus.

Of course Netflix CEO Reed Hastings has been comparing his own company to HBO for a long time, and used that analogy to justify massive investments into original and exclusive content. Coinstar quickly realized that it couldn’t match those investments on its own, which is why the company partnered with Verizon, Davis said.

Redbox Instant by Verizon is currently doing an invite-only alpha test, and is scheduled to launch before the end of the year. Pricing and possible tie-ins with Redbox DVD rentals are still unannounced.