Netflix CEO - no danger over data, Will Robinson, we're not like other tech firms

Stuart Lauchlan Profile picture for user slauchlan April 16, 2018
While Facebook is desperate not to be seen as a media firm, Netflix doesn't want to be thought of as a tech firm, particularly in the current data scandal climate.

Lost in Space
No danger Will Robinson

With 125 million subscribers worldwide, Netflix is about to pass another milestone as it clocks up more non-US customers than it has in its domestic market. With 7.4 million new subscribers coming on board in the first three months of this year, the digital media maven turned in a 43% rise in revenues for the same period, topping $3.7 billion.

With that international footprint still expanding, more localized content is the order of the day, complementing global hits like The Crown, Stranger Things and, most recently, Lost in Space. (House of Cards isn’t flagged up as much these days since the Kevin Spacey accusations went public…). Chief Content Officer Theodore Sarandos explains:

We've been able to launch original series in local language with local producers all over the world who've shot in 17 different countries original programming to date, and we expect that to continue to grow. And it's content that is for the country or for the region, but we've actually found great global success. This quarter, we have a new season of 3% coming up, by way of example, which is a Brazilian sci-fi show that really scored well around the world for us. People are super excited about the new season even though we've made it in Portuguese for Brazil, and maybe one of the first examples of local-language Brazilian television working around the world.

It’s also about bringing non-US content to the U.S., he adds:

We can bring our technology know-how to bring a great story from anywhere in the world to the rest of the world. Using our ability to subtitle and dub, and getting better and better at doing that quickly and accurately and artfully, can make a very local show at least pan-regional and, at best, global. We've seen that, like I mentioned, with 3%. We just saw it with Dark from Germany, which played really well. The U.S. numbers for us on those foreign-language shows would be big hits on cable with those numbers in the U.S.

One of the nice things is we're not trading off. We’re not watering down the local aspect of the show at all to make it travel. These are local storytellers telling stories for local audiences that are so good, they travel globally. So there's nothing less German about Dark, and there's nothing less Danish about Rain. These are not hard to find. There are incredible storytellers and producers around the world that just have not had access to a global audience before.

Not like Facebook

Operating on an increasingly International scale does bring some regulatory management issues, but Netflix will be relatively immune from many concerns faced by other tech firms in the wake of the Facebook data privacy row and the imminent arrival of GDPR (General Data Protection Regulation), according to CEO Reed Hastings:

I'm very glad that we built the business not to be ad-supported but to be subscription. We're very different from the ad-supported businesses, and we've always been very big on protecting all of our members' viewing. We don't sell advertising. So I think we're substantially inoculated from the other issues that are happening in the industry, and that's great.

Another differentiator is that while Facebook CEO Mark Zuckerberg wriggled and squirmed in Congress last week at any suggestion that his firm was a media or a publishing firm rather than a tech firm, Hastings takes the complete opposite point of view over Netflix:

We'll spend over $10 billion on content and marketing and $1.3 billion on tech. So just objectively, we're much more of a media company in that way than pure tech. Now of course, we want to be great at both, but again, we're really pretty different from the pure tech companies.

That said, he sees an interesting shift happening in technology terms now that is altering the media landscape:

The great thing now is it's easier to create a television network called an app, and I think all apps on your phone will have some form of video, or most apps will. So you just see a very wide spread of entertainment options, some of which are movies and TV shows, some are more interactive. All of that mobile phone energy will spread to the television with operating systems like Roku. So I think you'll see a very long tail. And of course, we want to be one of the apps that nearly everybody has on their home screen, whether that's on the phone or on the television. But again, if you look at the mobile phone ecosystem, it's very rich, and we see television getting close to that.

That being the case, the question surrounding Netflix is whether it can retain its disruptor status. While every broadcaster from the BBC to NBC to HBO wants to be ‘more like Netflix’, their existing operating models currently place restrictions on those ambitions. But what happens if the disruptor gets disrupted? Hastings has made the point in the past that however successful Netflix has been, its viewing stats pale in comparison to the likes of YouTube.

On the potential for future disruption, he argues that Netflix needs to manage its own destiny:

I's all up to us and execution. There are so many competitors, especially around the world, some of which are really focused on a particular culture. Others are, like Sky, in many different cultures. So the consumer has a lot of entertainment options. Whether our share of that grows or shrinks is really up to, do we produce great content, market it well, serve it up beautifully? If we do that really well, if we earn more of consumers' time, then we continue to grow. And if we get lazy or slow, we'll be run over, just like anybody else.

My take

While still frustrated at the more limited content line-up in Europe compared to the U.S., I do still turn to Netflix more than the other streaming services I’m signed up for. It’s interesting watching the likes of the BBC dabbling in ‘box set binge broadcasting’ for some of its programming via its iPlayer. To date that’s not made any significant impact and, as I’ve said before, there’s a long way to go before the Beeb is ready to drop the new series of Doctor Who or Poldark on one day. Netflix for now continues to be the digital disruptor of choice. Next up, convincing movie snobs that its feature content deserves a heading at Cannes. That really would be disruptive!

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