Netflix CEO Reed Hastings Weighs In On Streaming Rivals, ‘Patriot Act’ Edits, Movie Theater Windows, And More
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Netflix founder and CEO Reed Hastings tackled a wide array of issues surrounding the streaming giant during a packed 30-minute keynote session at the New York Times‘ DealBook conference Wednesday.
Asked about Topic A, the unprecedented wave of streaming competition coming from Apple and Disney this month and then WarnerMedia and NBCUniversal next year, Hastings reiterated his confidence in his company. Reprising the sentiment he has expressed on recent earnings calls and other public appearances, he said customers would subscribe to several services. Subscription numbers, though, should not be the metric being tracked, he argued.
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“The real measurement will be time,” he told moderator Andrew Ross Sorkin. “How do consumers vote with their evenings?”
He also noted that Disney is not planning to report revenue for its Disney+ business as a unit.
Apple and traditional media players have spotted Netflix, Amazon, Hulu and YouTube a head start of more than a decade, Hastings said. Now, “Everyone has realized, ‘Wow, this internet thing really works!'” he cracked.
Content spending, which has reached a once-unfathomable $15 billion a year, is not going to moderate anytime soon, Hastings said. “We’re planning on taking spending up quite a bit.”
Advertising is still not in the forecast, the founder said in response to an audience question wondering if Netflix could pursue a dual strategy of offering both ad-free and ad-supported versions. “It’s a funny thing,” he said. “Disney’s on the board of Hulu. Disney then bought [control of] Hulu. And yet when they go to launch with Disney+, no ads. When you’ve got a lot of insight into the model, you make certain choices. We feel very comfortable doing no ads, like Disney+.”
That comment aligned with others during the session, when Hastings seemed to gloss over Apple TV+ when he was asked about it, while emphasizing Disney as a competitor of note. “I’ll subscribe” to Disney+, Hastings said. “They have great shows.” When Sorkin asked if he was “long Quibi,” meaning bullish on the new Jeffrey Katzenberg mobile streaming service, Hastings shrugged and asked, “When is that launching, next year?” He said he hadn’t looked at it closely enough to render an opinion.
With linear TV around the world in a secular decline, there are plenty of viewers to harvest, Hasting said. Asked during the Q&A portion if a projected slowdown in the rate of subscriber growth in 2019 will be reversible trend, Hastings said,”We’re going to try to do the absolute best content that we can. And ultimately that’s going to draw in more subscribers. Whether that’s more or less than last year or next year, it’s hard to tell.”
Hastings defended Netflix’s decision to edit an episode of Patriot Act in which host Hasan Minhaj criticized Saudi Arabia’s Crown Prince Muhammad Bin Salman at behest of the Saudi government. “We’re not in the news business,” he said matter-of-factly. “We’re not trying to do ‘truth to power.’ We’re trying to entertain.” The Saudi government, he noted, allows Netflix to stream provocative narrative shows like Sex Education without edits. “We can accomplish a lot more by being entertainment and influence the conversation about the way people live, rather than being another news channel.” There are also lines that can’t be crossed, he clarified — if a country objected to LGBTQ programming and asked Netflix to remove it all, the company would not comply with that request.
Sorkin read from a New York Times editorial criticizing the Patriot Act move as rank censorship. Hastings shrugged, “You’re the New York Times. You’re a truth-to-power brand. … We’re an entertainment brand.”
As to movie release windows, Hastings said he didn’t expect any dramatic changes coming to the Netflix model. After intense negotiations, the company just released Martin Scorsese’s The Irishman in a limited run after large circuits declined to shorten the traditional window. It will debut on Netflix on November 27. While Hastings said he sees “a lot of movies in theaters” and enjoys the experience, he wasn’t inclined to move toward acquiring theaters, as some have speculated.
“We’re not in the business of theaters. We’re in the business of pleasing our members,” he said. Honoring the traditional three-month lag between the big screen and the small would deprive Netflix subscribers of what they want, he reasoned.
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