Netflix isn’t worried about the competition
Fresh off of its Oscars win for Icarus, a documentary about Russia’s doping epidemic in sports, Netflix held a press event at its Hollywood headquarters. There, inside a 280,000-square-foot, state-of-the-art studio that it just opened last year, CEO Reed Hastings talked about the state of Netflix and the industry as a whole. The setting seemed fitting, considering the company is planning an $8 billion investment in original content for 2018 alone. That programming strategy is what makes Hastings confident that Netflix’s future is bright, especially as it faces increased competition from the likes of Amazon, Hulu and, soon, Disney. The latter of which is also a partner, since it owns all of the Marvel franchises that Netflix has built a mini-verse around.
Hastings addressed this and a wide range of other topics during a 30-minute chat with members of the media. One of the most notable things the Netflix chief mentioned is that his streaming service doesn’t have any plans whatsoever to do live TV, even if rivals like Hulu and Amazon’s Prime Video are investing heavily in that space. “To follow a competitor, never, never, never,” he said. “We have so much we want to do in our area, so we’re not trying to copy others, whether that’s linear cable, there’s lots of things we don’t do. We don’t do [live] news, we don’t do [live] sports. But what we do do, we try to do really well.”
He said that while “all of these media companies” are trying to get into video, specifically newcomers such as Facebook, Netflix has been competing with seasons rivals like Amazon for a decade and he’s happy with the success of his company thus far. Earlier this year, during its Q4 2017 earnings report, Netflix announced that it added 8.3 million new customers that quarter, its largest single-quarter growth ever. Those numbers certainly seem to bolster Hasting’s confidence. He said that, while it’s a very competitive market at the moment — and it’s only going to get tougher with others like Facebook and YouTube joining the fray — he believes that if Netflix continues to produce great series and content, it has nothing to worry about.
“If we do our own Prime service, we’ll never succeed,” he said, referring to the idea that Netflix could offer something beyond its on-demand content. He added that what hurts Netflix’s competitors is that “their strategy is to win by being broad, you know, a little bit of everything.” Hastings said it’s also key to ensure customers that they’re never going to see ads on a Netflix product, despite the potential for lower prices and creating more revenue. Hastings didn’t have to mention Hulu or YouTube by name to know those are the platforms he was referring to. “Really having great experience — no advertisements or chopping up all of the content — vastly outweigh the fact that one company is gaining a lot of influence.”
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A major foreseeable threat for Hastings is Disney, which is set to launch its own streaming service in 2019 and it’s expected to be cheaper than Netflix. This presents a challenge because Disney owns Marvel Studios, and that could create friction with future developments of popular shows like Daredevil, Jessica Jones, Luke Cage and The Defenders. “We obviously want the Marvel Television series currently on Netflix to have a long and lauded run,” Dan Buckley, president of Marvel Entertainment, told Bloomberg in January. He said that new projects, however, would look for “networks and platforms that are the best fit for that content, including the Disney-branded streaming service.”
Although Disney’s offering hasn’t even launched, the company announced last year that it would stop streaming its content exclusively on Netflix starting in 2019 — including Lucasfilm and Pixar movies. If the two don’t work out a deal to keep that content on the platform, this could be a huge loss for Netflix and, naturally, a major gain for Disney.
Still, Hastings doesn’t think Disney will make a major dent in Netflix’s business: “The threat is probably that we just slack off. It’s great that we’ve had this early success but it’s so easy for companies [like us] to lose their edge.” At the end of the day, Hastings said, it’ll be up to Netflix, not its rivals, to be sustainable and continue growing. He pointed to the company’s expected revenue of $15 billion this year. “Our content is our crown jewel,” he said, “and it’s up to us to take that money and turn it into great content for [users’] viewing benefit.”