Reed Hastings has a message for anyone looking for a comprehensive catalog of streaming movies and TV shows: Don’t go to Netflix.
Speaking at the All Things D conference in California, the Netflix founder and CEO celebrated his company’s success and outlined its ambitions, but he also stressed its limitations. In May, Netflix found its share of U.S. broadband traffic was larger than that of the file-sharing service BitTorrent for the first time. And Hastings has plans to launch his streaming service around the world, country by country, starting with Canada.
“We have an opportunity to build a very large global company,” he said. “All of those 5 billion people [with mobile devices] like video.”
But Hastings does not think Netflix can ever afford to make that streaming video selection — Netflix Instant — comprehensive. Despite the growing amount of content that is available for streaming, the company does not expect to have a complete “watch now” library. The licensing fees are simply too pricey for its business model.
“At $7.99 a month, we can’t provide unlimited content,” Hastings said. “We compete for a very specific and small part of the pie. We don’t have everything, but we have a great bargain. That’s what we want the brand proposition to be … Apple and Amazon are very good at being comprehensive.”
Indeed, when an audience member asked Hastings about a specific movie he couldn’t find on Netflix, Hastings testily directed him to pay for it on iTunes or Amazon.
Netflix is facing increasing financial pressure from its providers, who are noting how much profit the service is making from their content. For example, Netflix’s 2008 deal with the Starz network cost $30 million; analysts claim its renewal will cost $200 million, or 6% of Netflix’s revenue. Hastings did not dispute this cost estimate.
The online movie giant may have seemed like it was moving into the content-making business itself after a well-publicized deal in March to make House of Cards with Kevin Spacey and director David Fincher. But Hastings stressed that Netflix was just the distribution arm of that deal. “We’re just a channel,” he said. “The only difference with this content is it’s exclusive.”
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