retail news in context, analysis with attitude

Netflix CEO Reed Hastings, fresh off a strong earnings report and creative successes like "House of Cards," has posted an 11-page essay on the Netflix investor website, in which he reiterates some of his core beliefs.

"We compete very broadly for a share of members’ time and spending," he writes. "Over the coming years, most other forms of entertainment will improve. Consumers will choose and consume from multiple options. Generally, cable and Internet networks have mostly exclusive content against each other. Piracy and pay-per-view are the only two competitors that can have a nearly full set of content.

"We call competitors for entertainment time and spending that do not bid against us for content (such as video game providers, sports networks and piracy) 'competitors-for-time'. We call the narrower set of firms that do bid against us for content 'competitors-for-content'."

Hastings makes the point that to be successful, Netflix has to compete in both arenas - that it has to define "competition" in the broadest possible way, because to ignore anyone or anything as competition is to open a door and allow them to compete on their own terms. (Which essentially what Netflix has done, allowing the company to reach the point where it now has more US subscribers than HBO.)
KC's View:
That's a lesson that every competitor need to keep in mind.

I am, by the way, sort of reassured by this other passage from the manifesto...

"If we could look decades into the future at the ways that people access entertainment, we would no doubt see a very different image than we see today - mind-blowing video quality, a proliferation of screens, yet unimagined natural user interface, and an unbelievable range of  choice.

"But if we were to turn instead and look at the person watching that screen, we believe we would observe a number of similarities across generations. We'd see someone who is getting a moment to escape into a story - to simply relax and enjoy one of life's real pleasures with their friends and family.

"People love TV shows & movies. We love being the best possible place to enjoy them. Ours is an amazing opportunity to grow, innovate and lead for several decades. We know we will have great competition along the way, and we embrace the challenge."

It is all about good stories. In the end, I think that's what really made "House of Cards" so successful - it was a ripping good yarn.