What show we should go with is about instinct: Netflix CEO Reed Hastings

This year, Netflix will spend $8 billion on content globally, including from India - the country from where it commissions more than any other international market

From a DVD rental firm in the 1990s to the world’s biggest studio and subscription-driven streaming service, Netflix has come a long way. It is now spread over 190 countries and has 137 million subscribers, more than half of which are outside America. In the past five years, since it started commissioning content, it has changed the way people consume entertainment and what they consume. The $11.7-billion entity, along with other streaming services, has also forced several realignments in the world of entertainment — like Disney’s buyout of Fox. This year, it will spend $8 billion on content globally, including from India — the country from where it commissions more than any other international market. The co-founder, chairman and chief executive officer of Netflix, REED HASTINGS, who is also on the board of Facebook, spoke to Vanita Kohli-Khandekar at a Netflix event in Singapore. Edited excerpts:

How much of Netflix’s success is about technology and how much is content?

They are two sides of an arch that pressure and support each other. Technology without content is YouTube. Think of Apple – it combined fashion with technology, it is like jewellery. But, the jewellery guys can’t catch them with technology. And, technology firms can’t catch them with fashion. For us, it is the combination of technology and content. We are better at tech than Disney and better at content than Amazon. 

What does your dashboard look like, what metrics do you follow and how do they impact your thinking? 

Membership by country, viewing hours, retention, sign-ups, growth, household penetration. If there is any problem in a country, those are the things we look at. Seven years ago, we were very low in Brazil as compared to the US and Mexico. So, we spent more time on the market, and then found great Western content for it. (Brazil is now one of Netflix’s fastest growing markets, with one estimate putting its share of revenues at roughly a fourth of the pay TV market). 

How do you ensure data doesn’t overpower the creative part of the business?

When you pick stocks, you use data. But, when you choose a spouse, it is about instinct and intuition. Similarly, what show we should go with is about instinct; the payment systems and other things are about data. The whole world thinks AI (Artificial Intelligence) driving our choices. It isn’t. We read scripts, then think of casting and analyse the show afterwards. The creative part is totally instinctive. The stuff where data is used is costing – can we produce it for half the cost? So, 75 per cent of the process is intuitive; the rest of it is about comparative shows, data, et al.  
 

As Netflix scales up, how different is it really from any media firm — you aggregate audiences and make pay or ad revenues?

Classically media firms have a very editorial point of view. We don’t. We are a customer-satisfaction company and will always remain so. 

There was some talk of testing ads on Netflix.

We are not doing ads. We were just testing with previews of new shows in the middle of the shows you watch. But, it scared people who thought Netflix was getting greedy. So, we are definitely not doing ads. 

You commission from all over — Brazil, India, Germany — and then release this content in 190 countries. Do some markets take to it more than others?

Small markets such as Singapore or The Netherlands are used to importing. So, they take to it more. Bigger markets such as India or Brazil which have strong local content take time. 

What takes up most of your time? How do you keep too much process orientation from overtaking a rapidly scaling-up 

creative business? 

I spend a lot of time talking to people internally, to keep things going — not on strategy but execution. Things are moving so fast that for the next five to 10 years, execution will be the big issue — logistics, customer support, there are hundreds of things involved in running a company.  After that (5-10 years), something else will replace TV and film which will probably start looking like novels or the opera does now (smiles). We have done a great job so far of optimising for flexibility, creativity and for process.   

(The reporter travelled to Singapore at Netflix’s invitation and expense)