This business model will self-destruct in five years.

Tick. Tock. Tick. Stock.

Netflix (NASDAQ:NFLX) CEO Reed Hastings made a brazen move yesterday, predicting the end of his company's bread-and-butter disc rental business during a conference presentation.

"We think the by-mail business is very strong but will probably peak in the next five years," he is quoted as saying by Reuters.

Five years is a pretty long lifeline, but Hastings usually tosses around long-term goals as they pertain to subscribers. What will Netflix do for an encore if Hastings' vision proves true?

"We can attract well beyond 20 million subscribers worldwide," Hastings suggests, once the company's online streaming business takes over as the Netflix workhorse.

That's a bold prediction, well beyond the company’s current rolls of 8.2 million movie buffs, but the key word in that statement is "worldwide." Once Netflix is well-entrenched in digital delivery -- and it's clearly on the way there, since launching Internet-based streaming for PCs last year and nailing the last mile with home theater set-top solutions this year -- the company will no longer be limited by the overnight delivery range of its local distribution centers.

Twenty million subscribers on a planet with 6 billion people doesn't seem like an overly generous market-share nibble.

The problem, of course, is that digital delivery will level the playing field. Netflix isn't the only company trying to make its mark here. Apple (NASDAQ:AAPL), (NASDAQ:AMZN), and Microsoft (NASDAQ:MSFT) are already selling digital video downloads and rentals.

Netflix has a huge data advantage, in that its recommendations engine can predict personal viewing preferences, but Amazon and Apple are no slouches there, either.

We also can't ignore the possibility that movie studios will leap over the middlemen distributors to offer digital streaming directly to end users. The broadcasting networks -- like CBS (NYSE:CBS) and News Corp’s (NYSE:NWS) Fox -- are already doing so, drying up the allure of the middlemen peddling prime-time television shows.

In short, while I don't disagree with Hastings' assessment that the mail-order disc rental business will peak in five years -- if not sooner -- I think he paints too rosy a picture of what will be a deeply competitive landscape in the future.

Either way, the clock -- and the stock -- are ticking.  

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