For as long as Netflix has existed, there’s been widespread theories and speculation that the subscription-based service is a primary cause of cord cutting. But today, Netflix CEO Reed Hastings made it clear–as he has tried to before–that he’s not interested in stealing customers away from cable TV.
“To the degree that we try to be a substitute for cable networks,” Hastings said, “[that’s when] we get into a cord cutting battle that’s not really in our interest. Our view is to be complimentary.”
Hastings made the comments during an earnings call Wednesday, when the company announced earnings above Wall Street Q4 expectations, adding 600,000 U.S. subscribers and hitting revenues of $876 million. But here are the real numbers to watch: Netflix lost 2.76 million DVD subscribers, suggesting its traditional disc business is fast declining, whereas its streaming business is steadily growing again. Members consumed over 2 billion hours of streaming content during the quarter, an indication of just how important original and licensed content has become to Netflix’s future. Today, Hastings gave some insight into what that digital future might look like.
When asked whether Netflix would bid on current seasons of television content, Hastings said he’s less interested in “catch-up TV,” and more so interested in offering “complete prior seasons.” In other words, don’t expect to watch new episodes of Mad Men anytime soon. Hastings insisted he had no interest in getting into a “cord cutting battle” with the cable networks; rather, he wants a larger on-demand offering. “We’re comfortable with with that partitioning because our segment is very broad and big at a low price point,” he said. “So no, we’re not bidding on any current seasons [of TV].”
That thinking will translate into how Netflix delivers original content, such as the $100 million House of Cards series that the company has licensed to much fanfare. Hastings hinted that rather than string out new episodes week after week, as is common practice for traditional television networks, Netflix would essentially offer it all at once. “The Netfix brand for TV shows is really all about binge viewing,” he said. “The ability to get hooked and watch episode after episode. Our release strategy … is to get [you] hooked rather than get strung out.”
To measure a program’s success, Netflix won’t look at pilot ratings (it’s already licensed the show for two seasons) or how it’s doing up against other traditional television shows (after all, it won’t be competing for a particular time slot). Instead, Netflix said it will measure its original content by total views versus total costs; how much it attracts new subscribers; and whether or not it bolsters the Netflix brand.
