DealBook Conference 2019
November 6, 2019, New York City, United States
DealBook Conference 2019
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Netflix CEO Reed Hastings Talks Streaming Wars, Apple TV+, Disney + and more | DealBook
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About speakers

Reed Hastings
CEO at Netflix
Andrew Ross Sorkin
Columnist & Editor-at-Large at New York Times

Wilmot Reed Hastings Jr. is an American billionaire businessman. He is the co-founder, chairman and chief executive officer of Netflix, and serves on a number of boards and non-profit organizations.

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Sorkin is an award-winning journalist and author. He is a financial columnist for The New York Times and a co-anchor of "Squawk Box," CNBC's signature morning program. Sorkin is also the editor-at-large of DealBook, a news site he founded in 2001 that is published by The Times.Sorkin is the author of the best selling book, Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves, which chronicled the events of the 2008 financial crisis. The book was adapted as a movie by HBO Films in 2011. Sorkin was a co-producer of the film, which was nominated for 11 Emmy Awards.Sorkin began writing for The New York Times in 1995 under unusual circumstances: he hadn’t yet graduated from high school.

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About the talk

Topic: Business

Founder and C.E.O. Netflix Reed Hastings talked to Andrew Ross Sorkin at the New York Times DealBook Conference on November 6, 2019.

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One of these days we wanted to see you was because we are right in the midst of the streaming worse. We are which have just begun with apple plus just last week and with Disney plus coming next week and I want to use this opportunity for you to help us understand how you're looking at all of these different component parts. And what's about to happen to our media ecosystem. So start the car. I know that you have historically said that you don't think you have any competition or that if you do it is with sleep. Remember that line with the Great Line only got a couple last year, but you got

more laps before when I doing is better happening in this ecosystem affected. We have created inspired what you think is going to happen you look at this and in the middle of this apple, what is it? What is it look like to you has a lot of competitors all throughout the world. But if you're asking in the US market YouTube Hulu Amazon Prime Netflix all launch 2007 2008. So 11 years ago, the four of us have been you know competing hard for all this time and then everyone's realized why this

internet thing really works and consumers are enjoying it. And so now all the major media companies are investing in their own services, and it's great for consumers. Brosco we've already got a lot of competition and most of it is people will watch Leslie near TV. And now watch they Disney content on the Disney plus her I mean, I guess the real question though is do you think that people are going to make decisions and say I'm going to go to Disney or I'm going to do Netflix people subscribe to a couple Services the way that

they should I do a couple news services, but then I'm terms of time. That's the real competition the tricky thing in this streaming war is you know apple and what is he talking to break out revenue for the service and you'll hear some subscriber numbers, but you can just bundle things in so that's not going to be that relevant. So the real measurement will be time how to Consumers boat with their tanks and do they end up watching what mix of all the services so starting to 1 to start to see a break out that like from Nielsen and others told our own Maureen Dowd No one will ever have a

monopoly or mythology horse store on storytelling Nautilus. Not anybody Netflix platform to tell great stories very different than coming up. We have two popes. We have the crown in a couple weeks and that's about pleasing our customers and that's what Disney does to I mean, he's been doing creative content for a hundred years and they're readily good at it. There were 80 billion in Revenue work 20 billion and we're both focused on how do we win viewing time for you

by doing incredible work telling stories that you all care about. But but how much of it and people are the critique about Netflix is it is a volume play that they eat that you were trying to BTV all of it and that some of these other services at least our marketing themselves. It a different way. I don't know if you think that they are producing more crime Thriller. I'm just super well in in Sweden expect that are open that but it did 15 times more viewing in the rest of the world going to lie that it did Sweden. So

we've got this huge an interesting leyendas hugin in Argentina. So you get these, you know, if you produce a wide variety you get lots of different sharing around the world and fundamentally, we want to produce everywhere in the world and connect people really build empathy through all those shows and to do that that takes a wide variety. How are you that this is all one grand bubble. And the reason is you're spending a small fortune to be doing what you're doing you're taking on debt to do it others are spending enormous amounts of money often either

taking on dead or organisms take on Lost And depending on Corporate structure for quite some time but probably the definition of a bubble is it could go down again and I don't think the drivers or cumulative media spending is going to go down. So linear TV. It is a huge of Revenue Source in time Source that's declining and that's fueling the growth of all of the internet services including taking up quite a bit. We're growing in investing around the world.

We've been strong and series now, we're getting really strong and movies. We want a big thrust for us a little bit this year with Klaus is animated and next year. We've got a brilliant beginnings of a great animations late. So we're investing heavily their unscripted for doing more more. So, you know, we got a long way to go especially on a global basis. I know something that I think people underestimate you know here in the US is the u.s. Is 5% of the world's people and 95% all those people around the world love entertainment love to Vision seems to be a massive land grab for talent. Both

Stars themselves out of sequence has been working with you and we just spoke to her but also for showrunners you're paying, you know, there's three hundred million dollars that reportedly to bring them aboard over multiple years from multiple shows. We're still not doing the very biggest movies in TV. We're probably will continue to have content in stories that people feel is unusual something. I haven't seen before so we do a lot that's very economical and Chelten Amazing Story others. Did she know has a credible special effects? Pricing question for you. So now there's

all this competition amazing things about Netflix and you can cancel the right and he's doing is trying to elongate that so they're actually that you can if you want you can subscribe for a year and I think in some cases you can shut up to three years. Do you see long-term people being able to cancel as quickly as they can. The reason I ask is there so many people say I love you know name a series that's on Netflix binge it or I'll watch 5 Series this month and then I'll switch it off

and I'll go over to HBO Max and I'll switch that off two months later and I'll go to the next place has lots of ways overtime different tearing different times to tune the commercialization again. Really what we focus on is how do we have a service people want more of the time we don't focus on how to lock a man. We focus on how to attract people how to have so that we can all we want you anytime. I want to relax here in front of the TV and you think you know do I turn on the cable linear TV. Do I turn on YouTube by turn on Netflix and we want you to choose Netflix because you're in

the middle of a great show because you know, you're going to find more because this great title so that that's the main focus mobile and I'm sure you make some hints more more more comments about mobile many people watching on their phone. Jeffrey. Katzenberg is launching quibi next year. You probably get some the date already watching meaningfully on mobile and you think that the the format open we have to change to do that, you know, 30 year old plus multi watch on TV, but younger people are going up into watching a lot on mobile in the question is as they get more wealth if they get

a house, do they get a big screen TV and then they switch over like everybody else were they? Dave Barry mobile focused that's unclear. But most of our viewing sun TV today. Are you long for thee? I don't have an equivalence movie coming out next year sometime, right? Is that the one you worry about today? They really understand creativity. We learn we observe we watch them. We admire the heck out of what about Apple companies that are going to Disney's the one that we really had the most to learn from it from Savannah tainment. That's a polite way of saying have you seen this

morning show you would you want to do with that? I know I don't keep a list except on Netflix, but other shows like Amazon has fleabag. Question, which is we've talked a lot throughout today about antitrust around these various Services being attached to each other and what it means and one of the things you are seeing is sort of more and more walled-off gardens in different places at AT&T. Obviously bought Time Warner. HBO. Max is going to have a huge leg up to the

extent does in part because of a bat There's issues now obviously about 2 years ago now I want to stay on Apple. You stopped accepting Apple pay Spotify, by the way is suing Apple over this you have an agreement with T-Mobile on the other end of things. I'll get back until we came earlier your today. Do you think there's a problem with all of this different types of consolidation? And do you think that you will be that you're being blocked out from any of it that people consumers feel great about and really want to watch the no one's going to block us and we've never been

locked it's fine. So now it's a pretty background issue. The big issue for us is how do we develop amazing stories that you all haven't seen the unbelievables a recent 1/8 part mini series in a very tough crime in the first episode 7 episode 2 tracking down, you know, the guy who did and when we do something that's like that then it just takes off and don't worry about you are at the advantage or disadvantage rather to others at all it making any competitors you would sit with him and say what I would say the App Store download the app in the

app store. Netflix may not pop up number one. If if somebody else that people know about Netflix and they want that app, and I don't think it's ranking is going to make a difference in the store. What about the pay them over the which is to say that they charge obviously a big fee to pay through Apple you guys have decided not to do that. It creates an extra hurdle in the onboarding process of getting on to Netflix and sometimes drop payment methods depending on you know, how much consumer business

there is on it nothing more than a commercial relationship that way but I guess my question is do the connections easy connections of Distributors connecting your content. When is it's a very wide range of platforms for that may be the difference. I think that Hollywood for very long time with about that. There was a view that we were exporting our values around the world. And how much do you think about Netflix now in that context about exporting Valley or do you think that as you become a more and more international company as a domestic company that will change

the rest of the responsibilities for the way you think about it I think about it is mutual sharing, you know, when this a great friend show like family business on people all over the states enjoy it and it spreads and there's a hundred and ninety countries are we thinking of you know all in the same footing sharing content and you know entertainment does have a magical property of building empathy and it allows you to connect across social class racial group. Nationality of all kinds of things in the experience people's lives that you don't normally see and that's the power

of it. So just think is very multilateral rather than like u.s. Boarding. The reason I ask is you have a comedian huh? Sound of a great show, but he made some very critical comments as you know, very well. How about MBS in Saudi Arabia and Saudi Arabia sent you a letter and said you have to take this episode down and you did why business for not trying to do truth to power. We're trying to entertain and we can pick fights with governments about newsy topics or we can say

cuz this Saturday government allows us to have shows like sex education the choa Perry liberal lifestyle and you know, very provocative and important topics and so we can accomplish a lot more by being entertainment and Influencing, you know what Global conversation about how people live in trying to be another news channel. This is actually from an op-ed in the New York Times by making the episode unavailable in Saudi Arabia. Netflix has become complicit in pervasive censorship that artist entertainers journalist and regular citizens have long had to deal with in the Middle East.

Are you guys are a truth to power Brands? That's what you stand for it. So it would be terrible for you get to Warren entertainment brand and so we don't feel bad about that at all. What we want to do is create room for all of our entertainment to be able to be seen around the world. But let me ask you a question. Don't think it would have taken place in Georgia. For example with that rhyme with pulling out of Georgia be a participant tonight. That's a lot different than us

being a participant and say the French election for the British election or that kind of thing to take out half the shows, you know, normally funny interesting. I need one more pair of quite Justified critique of MDS, but that's just like not our core Brands that's a news kind of thing. You know, what's up? If you want to be a news brand then you have a different set of things that you do and if you want to be an entertainment brand and it's really about sharing lifestyle. Then you do have to draw hard wise, but there were round things are a lifestyle. Not

around, you know, the current news in just a couple of more questions that relate to my headphones. So there has been a headliner report that you are considering or are starting to test the idea of allowing people to put their play button on prevent the super speed 1.5 or 2 times as fast forward but close to it, as you know among artists in Hollywood. I want to reach you at Aaron Paul the actor from Breaking Bad was just in your fabulous new film wrote stop as the first and talked about in this article. I need to speak out. There is no way Netflix will move forward with this

that would mean they're completely taking control of everyone's part and destroying it Netflix is far better than that. Am I right? What Aaron is right in that? Our job is to have both creators and consumers feel excited about Netflix and both are important audiences. And so sometimes we do things like play next episode over the credits or long time ago. It was watching a movie on a mobile phone that was singing is like a terrible thing. How can you let my heart be seen on a mobile phone, but we have to balance both of those considered what season are both very

important and in the speed up, which was only one point five times a number is even care about that the degree that consumers care in a lot then we will go talk with creators and see you know, what is a use case has obviously things like DVD players and pads functionality like this a long time, you know, and but we do care about creators in the creative intention and vision, but we also care about consumers and so that leads us to do things like when you watch a series and you can go skip intro You know on the second subsequent of a seer of an episode of people like that a lot. Not

all creators like me ask you a question that relates to theaters cuz this has been a big debate for a very long time are the Irish music playing by the way right near here. But there was an effort to try to bring the Irishman from what I understand to theaters around the country and this idea of a window. I think they wanted a 60-day window. This is the theaters you wanted less than that. I think 45 or 30 days are in 20 days. What you just buy your own feeders at this point, but it's the one out of the business. And

so when we produce a great film like a two popes or marriage story or Irishman, we want to get it out to our members and that's what really drives us again, you know personally, we love to eat a lot of movies in theaters. It's a different experience. It's nice to have a crowd of a comedy or horror like that scare thing if you got a good audience, so we're fine with either. It's just that they want exclusive window which would delay are released on Netflix. So that's the one who, you know, if

theaters want to carry Netflix films once they're on Netflix because people want to go out for the group experience. Do you think long-term you'll ever you'll ever get to it you'll ever get to a meeting of the minds with the theaters in the business and that's how we're going to focus on and again, you know, if they want to carry like last year this was Roma after Roma went on Netflix. There was still a big theatrical and people going so I think that's the windows, you know, go away, you know, then they're welcome to carry

cuz I can sometimes you want a group pics. You don't remember what happened to your internet was bad for bookstores telephone newspapers bad for video stores, but it's been really good for a restaurant like they're going it's a going out experience until I think it'll turn out to the internet like they know to reserve a seat in the tickets and all those things is going to help with the actual business grow. But again, we really do Focus on our members, let's bring the lights up. I see which Greenfield there. I know Matt blank for me to show

time is going to so many people here that I know have questions and I wanted to make sure that they get a chance chance on goal here. Rich Let's Get Rich or microphone right here. Thanks, Andrew. So read there's been several times throughout Netflix is history where investors have feared that you were passed your peak in terms of growing Global subscriber count kind of the fear that you're now on the downhill with 2019 set to be lower than 2018. Is this a permanent downhill or are we on the downhill slope or you know, can you reverse that and start

growing again on a global basis in 2020 and Beyond and more subscribers whether it's more or less than last year or next year too hard to tell but again I think of it as all of the near TV over the next 5 to 15 years is going to move to the Internet. So you got a very large woman on a global basis and that should allowed us to build a very large subscriber base, which is what we're working on and just to your Android point before how does Price play into that you're

experimenting with much lower? price points in India in Malaysia Yes, in an inn in India. We wants to roughly $3 price point but the average mobile phone monthly unlimited subscription is $2 a month in India. Okay, where we in the you ask my pay 60 or 80? So there's a big gap of what people are used to paint. I seen that blank their phone with CEO Showtime. Greenland billions are not now much bigger role is just so type of God has been created by the media there streaming Wars on the new guys. You guys have one game over and we'll see how everybody else does but something I discussed with Andrew a

Squawk Box last week. I might have time to take an inverse view of it here self. Say we're sitting here two years from now and Disney has 50 million subscribers and the you know, your your point on Revenue transparency there aside for the moment. Should the public markets value that part of their business the same way they value Netflix. Cuz I'm not an expert on valuation the little dabbling. I've done a lot to hear some stock market. I lose so but I would say that the way to think about it is many people are going to build successful businesses with

streaming including I'm sure showtime and so then it's really just a share question, which is what share of Ewing are you earning over time? And ultimately if you have a lot of viewing you can monetize that either with ads or subscription or some combination, but the key thing is producing adding enough Creative Energy that you become a destination for her for Content. So I think the way that you answer the question is in 2 years if Disney is winning huge viewing. Will they be more valuable than today? And that's why they're so motivated on that and I hope that you guys

have more viewing also on the internet cuz I got it all comes out of linear and when you can watch billions On Demand is just so much easier in a bigger audience. I seen you a burger at the great director up there. Let's get him a microphone. You don't I thought that what you were just saying. Hello. I thought that was that was just a wave. How I'm saying hello to you and you're saying low as well. I saw some other hands with questions right there in the middle. I want to go to Hulu has a model where they've got

ad-supported and they have no ads and you pay more would you ever do that? They love that supported model. They make more money per person when they are going to add supported route, then when they're going no ads so they barely advertise that option in fact, so what do you think about that for the future? You know, it's funny thing cuz Disney's On The Board of Hulu Disney Then plot Hulu and yet when they go to lunch with Disney plus no ads so, you know when you got a lot of insight really into the model, you know, you make certain choices. So we're very comfortable doing though as

like Disney plus and we're going to compete on that bass. I see more hands right there. I see that Brian stelter Brian stelter. Who by the way has a great show called The Morning Show on apple. Plus there's a question that they both released Andrew and I are both of our jobs in your TV to Klein ain't it is declining the argument from cable operators is live news and sports is what I always keep people tether the cable. Are they wrong? Do you think 10 20 years out is even live news in sports going to be off on Netflix

4K and being able to do life or can I don't think the television broadcast Industries going to convert there? Because you can pick up just the homes who have 4K and so you can offer it early not sure on news. And again I think was going to happen in linear is probably a very slow decline over many many years. So think of broadcast I went lost share against cable networks, and it was two at 3% You know, I'm share for 25 years or you think about six line telephones to Mobile Fix mine went down very slowly. Even AOL

decline quite Slowly out-competed by in a Broadband. So, you know, I don't think there's any in the short-term cable would just drift and remember the cable companies have Broadband so, you know one gigabit packages. I think I saw another question right here and I apologize. Go ahead. Thank you for your time today. So I read an article a few months ago about fortnite taking Netflix viewership. And Google is launching. Its gaming streaming platform apples getting into gaming and I wonder if you see

Netflix going Beyond its core product into something like a gaming streaming service or individual content creation like Instagram. No, I mean really focused on doing incredible series and films and unscripted. But you know basically in that category and you're right, there are a lot of other things that people do to entertain themself, you know, including fortnite and the original quote was we compete with fortnite more than HBO meaning of fortnite gets a lot more hours of you and ultimately it's about competing for those hours of Ewing but we don't compete with or nights

a better by doing something like that because we're not afraid to admit that we compete by doing the most amazing TV shows you've ever seen so you put down fortnite and you come to watch our show has lots of people watch a mix and the great thing about the competition with Disney over the next couple decades is double raise the bar the average quality of our movies and series and then for both competing with, you know, YouTube and Tick Tock and you know, all these other we can video gaming services. Thing people I saw Steve case over here somewhere

where we go. There. You are Steve given that AOL merger with Time Warner if you were running AT&T would have you bought it. I had a little PTSD being in the building is Right announcer AOL Time Warner merger, 20 years ago in January and 4th walk to graduation read a member. We talked before you launch streaming. It's been an amazing run. I tried to recruit Steve on to our board of directors in the late 1990s. Yeah, maybe maybe a little after that. I was probably conflicted at then

answered answered shipping the desk by mail. I think you should go online but that's a long time ago answer the question obviously idea of the things that are not happening just be plus other times. I got company together had all the assets to win. It didn't have the culture the people to the passion and kind of long-term vision. And so I think they'll be a similar challenge AT&T Time Warner merger. Thank you. Dylan Byers in the final question star Can we get can we get Dylan and Dylan a microphone? Thank you so much. So read I

get the impression from your answer to Andrews earlier question that you're somebody ambivalent about quibi Jeffrey katzenberg new Enterprise. I guess what I want or more General and philosophically speaking is do you see a viable business in short form content on mobile as in 5 to 6 minutes episodes of Premium quality programming and he's at a business in Netflix would ever go into you know, you're going to see so much Innovation on mobile. To say things like Tik

Tok, you know snapped is now doing things. I'm sure they'll be a lot of innovation on that side for us. We're really focused on you know, what we do. Well, we've got so much room to go. You know, I got to compete with Matt blank everyday and forms of producing again. Oh great television shows and movies and that that consumes us. So that's The core Focus for us, please. Thank you. Thank you. Thank you.

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