Netflix Bets on Physical DVDs and Continues to Win

netflix_hastings2.jpgAs Fortune senior writer Michael V. Copeland reports, a Silicon Valley venture capitalist once described Netflix as an “ice cube in the sun.” But he said that what that venture capitalist got wrong, and Netflix CEO Reed Hastings has right, is that digital downloads are not going to wipe out DVDs anytime soon, no matter what Steve Jobs and his iTunes team would have you believe.

Netflix is doing great both on Wall Street and by its customers, who continue to swear by the service. The simple fact is that DVDs still look better and work better than any of the online video services. They’re also portable—while they have copy protection, all you have to do is bring the DVD to another room to watch it there. And despite the fact that some online services like Vongo and the iTunes Store let you watch movies on mobile and portable devices, it remains difficult to do, with a very limited selection—mainly due to restrictive licensing and distribution agreements with the major movie studios.

Netflix does have its Watch Now online service. So they’re still preparing for the future, albeit one appear that’s as far away as ever.