Netflix 'got overconfident' this year, CEO Reed Hastings says
Netflix Chief Executive Reed Hastings, confirming what his critics have said for months, conceded his company "got overconfident" this year and moved too fast to get its customers to stop ordering DVDs in favor of online streaming.
He also said his company sometimes pays too much for its content.
"Our big obsession for the year was let's not live and die with the DVD," Hastings said Tuesday in an interview at the UBS Global Media and Communications Conference in New York.
Earlier this year, Netflix introduced a new pricing scheme and did away with its $9.99 plan that let users watch an unlimited number of movies online and rent one DVD at a time. Now, subscribers who want that combination will have to pay $15.98 a month — $7.99 for Netflix Instant streaming and $7.99 to receive discs in the mail.
That led more than 800,000 subscribers to cancel the service and caused a multibillion-dollar drop in Netflix's market value.
"It turned out to be a little too fast," Hastings said, adding that Netflix took an image beating similar to the one that Bank of America got for trying to charge monthly fees for use of its debit card. Ultimately, he said, this will be forgotten in a few years when streaming content becomes the primary way people view content.
"Streaming is the future," he said.
Hastings spent much of his interview talking about Netflix's push into original content. The service is making a political drama called "House of Cards" starring Kevin Spacey and also is producing new episodes of the critically acclaimed Fox sitcom "Arrested Development."
"'House of Cards' is coming together great and 'Arrested Development' will be off the charts," Hastings said. He added that the creative community is "welcoming us as another bidder."
And why not? Asked if Netflix has been spending too much on old TV shows and movies for its streaming service, Hastings acknowledged that "sometimes we do overpay."
Hastings said the competitor he fears most is Time Warner's HBO and its new HBO Go service.
"HBO is becoming more Netflix-like and we're becoming more HBO-like," Hastings said, referring to the pay cable channel's new iPad application HBO Go, which enables subscribers to watch the network on the tablet device.
Currently, HBO does not offer its HBO Go service to people who don't already buy the pay cable channel via a cable or satellite operator. "Today they are kind of in a gilded cage," Hastings said. "They are not competing directly with us, but they can."
HBO has repeatedly said it does not plan to offer a version of its channel that would bypass multichannel video programming distributors.
-- Joe Flint
Photo: Netflix Chief Executive Reed Hastings in September. Credit: David Paul Morris/Bloomberg