Netflix CEO Reed Hastings talks content costs & competition
On the heels of better-than-expected quarterly results, Netflix (NFLX) CEO Reed Hastings expressed confidence that his company will be able to continue to ride the wave of Internet TV and accelerate its growth.
"It really depends on the content," Hastings said. And while he stuck with the company's line that the potential market for Netflix in the US is 60 million-90 million, up from the current 47 million U.S. subscribers, "really, it's every human being."
One factor that will help drive Netflix's growth: New partnerships with cable companies that will be included within set top boxes, with a deal with Liberty Global (LBTYA) overseas, and a partnership with Comcast (CMCSA) rolling out now.
"It definitely helps to make Netflix convenient and accessible," said Hastings. "For a cable company what it does is it gets consumers to stay on their set top box as opposed to switch to an Apple (AAPL) TV or smart TV."
Hastings dismissed potential concerns about growing content costs as Netflix shifts away from licensing deals to creating more of its own content, which requires more upfront costs, but has greater potential rewards.
"I think everybody looks at a business like ours and says, 'Are they going to be able to finance all those great investments?' But we have a market cap over $50 billion and $3 billion-$4 billion of debt. So it's like having a million dollar house and having $50K of debt on it," said Hastings.
"It's really not that scary on a million dollar house."
As for growing competition, ranging from Amazon (AMZN) to direct-to-consumer apps from Showtime, HBO, and Starz, Hastings insisted he's not concerned. And he said he's not seeing an impact of Amazon spending more on original content.
"We compete with FX, with AMC, with HBO, with so many networks, even with the broadcast networks for new shows and Amazon is one of those bidders, they're not even the biggest of those bidders. So it's one more bidder and they're doing some great work," says Hastings.
"So it's really about can we do the best shows, can we do the best work we can? -- and of course there's always going to be a lot of tough competitors."
With Hulu working on a new over-the-top streaming service, Hastings stressed again that he just sees all these players as populating different channels on the new, digital dial.
"That's one more channel," said Hastings of Hulu's new offering in the works. "If you don't watch Netflix some night what do you do? Sometimes you watch a movie, sometimes you watch sports, sometimes you're on YouTube or Facebook or Snapchat. We compete broadly for screen time-- that's not just against a TV provider it's against all the things you do with that screen."
And while Hastings took every opportunity to promote the upcoming exclusive "'The Crown" he also paid a compliment to his rival HBO, saying his favorite show *not* on Netflix is HBO's "Silicon Valley".
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