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Netflix CEO Reed Hastings: Sleep Is Our Competition

For Netflix, the battle for domination goes far beyond which TV remote to pick up.

Netflix CEO Reed Hastings: Sleep Is Our Competition
[Photo: Mondileinchen/Wikimedia Commons]

Netflix has become synonymous with binge-watching—the act of roaring through a full season of Stranger Things with Seamless as your copilot. The advent of this routine has undoubtedly changed our consumption habits, with 70% of Americans (and 90% of millennials) indulging in an average of five episodes per sitting, according to a Deloitte survey.

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“Binge-watching is great because it puts you in control,” said Neftlix CEO and cofounder Reed Hastings at Summit LA on Friday. “You have complete flexibility.”

In fact, Netflix now goes beyond”binge-watching” and induced something called “binge-racing,” in which fans complete a new series on the very same day it’s released. The number of viewers pulling off that ambitious feat actually increased more than 20 times in the last three years–to 8.4 million Netflix members. The company even referred to it as a “sport” in a recent press release.

And it’s not just the United States. Hastings shared that binge-watching has been widely adopted overseas, which now accounts for 50% of customers. (Only five years ago, the States accounted for 100% of its audience.)

“The incredible thing is just how broad the love of binge-viewing really is,” said Reed. In Brazil, for example, in which TV viewing is mostly linear with no real DVR market, DVDs are still in high demand (and in their own way, a type of binge-viewing). “But once people could do it over the internet … it’s been massively popular.”

As binge-viewing gains greater momentum abroad, most notably in Europe, says Hastings, the streaming video giant is reconsidering the competitive landscape. He referred to the “winning moment of truth,” the consumer product term for what you finally choose when presented with options. In general, this term referred to choosing two equal competitors within the same category, like two comparable shampoos in the supermarket aisle. And one could very simply think of Netflix in the same way:

“It’s 8:00 in the evening, you’re next to your TV–which remote control do you pick up: PlayStation remote? TV remote? Or do you turn Netflix on?” asked Hastings.

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But as he further explained, Netflix–having induced its own lifestyle habits–no longer restricts itself to the entertainment industry. If anything, says Hastings, he encourages employees to think outside the remote bubble.

“Sometimes employees at Netflix think, ‘Oh my god, we’re competing with FX, HBO, or Amazon,” said Hastings, “but think about if you didn’t watch Netflix last night: What did you do? There’s such a broad range of things that you did to relax and unwind, hang out, and connect–and we compete with all of that.”

More specifically, explains Hastings, there are only a certain amount of hours which humans can tend to activities, and Netflix’s goal is to occupy those moments–and deliver the utmost joy to the consumer during that opportunity.

“You get a show or a movie you’re really dying to watch, and you end up staying up late at night, so we actually compete with sleep,” he said of his No. 1 competitor. Not that he puts too much stock in his rival: “And we’re winning!”

With such success, one might suppose Netflix will venture into other entertainment categories, such as video games or sports. But Hastings stressed that Netflix focuses on owning TV and movie categories–shifting into more niche sectors such as unscripted and talk shows, and expanding original content in Latin America, Asia, and Europe.

“Sports is very well distributed already, and it’s on every network,” said Hastings. “It’s hard to for us to see what we would add value to–simply putting it on the internet [is not enough].” Netflix’s core value lies in not only what they can add value to, but also what streaming can best support.

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Hastings pointed to House of Cards, which he presumes would not have had the same popular response if it found itself on linear TV: “Our ability to support binging makes it much more valuable because you can get into it better.” (Hastings did not mention the sexual assault allegations swirling around House of Cards star Kevin Spacey or the decision to cancel the popular show.)

Meanwhile, when asked if he, personally, had any rules at home when it comes to binge-watching, Hastings was adamant, “we’re not big on rules.” Instead, he employs the same media consumption philosophy he offers to the public:  “Watch a ton, enjoy it.”

This story has been updated.