Netflix has become a dominant force in the home entertainment market, but in a new interview, CEO Reed Hastings says he’s more concerned about competition from Snapchat, YouTube and Facebook than Hulu or Amazon Prime.
Talking to the Wall Street Journal, Hastings said that he knew Netflix had become the leading streaming service in the industry, with 37 percent of people between the ages of 13 and 54 admitting Netflix was their go to streaming platform of choice. Technology and the way viewers get their content was always changing, however, Reed argued, and soon Netflix would begin to feel outdated.
“The competition we worry about is the substitution — when people are spending time on Snapchat or Facebook video or YouTube, or some new app that isn’t yet invented,” Hastings said. “Human entertainment will have moved on to something new. Then the ultimate challenge for us is, can we figure out what that new form of entertainment is?”
Hastings added that he viewed movies and television the same way he did the opera and novels: eventually, they’ll become pretty niche businesses and entertainment companies will need to find a new way to engage audiences. Part of that business plan includes turning money into joy. According to Hastings, Netflix is set to bring in $8 billion from customers and it’s the company’s motto to turn that amount of cash into pure joy for its audience.
That’s why the company doesn’t mind taking out hundreds of millions of dollars worth of loans and increasing its debt — the goal is to eventually have 50 percent of its content be original and exclusive to the service, giving subscribers a reason to stick around and providing those who haven’t made the jump to Netflix a reason to do so.
Making sure that Netflix has the best content available is partly how executives decide which shows to renew and which not to. Stranger Things, easily one of Netflix’s most popular and successful series on the platform, was renewed before it even premiered. It’s not a move that Netflix makes easily, but it’s also one that it’s comfortable with, making the same move with other popular shows including Orange is the New Black, House of Cards and Love.
“We look and we say, for every show, if a show cost $100 million, how much joy, how much viewing did it create,” Hasting said. “So we look at it as how much joy can we create of your money. And if we turn it into joy effectively, then you’re happy and you tell your friends and we grow.”
Netflix experienced an increase in profits, based on its most recent quarterly report, but has noticed a slower growth than expected in subscriber rates. Hastings has said previously that part of that is because of the increase in subscription prices, but said the company hopes to bring in more subscribers through the exclusive content being offered.
Currently, a basic Netflix subscription will cost $9.99 and a 4K, shared plan will run subscribers $11.99.