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Netflix CEO: We're Better Off Independent

29 May, 2013 By: Chris Tribbey

Netflix CEO Reed Hastings shrugged off the suggestion that his company would be better off if it were acquired by a company such as Microsoft during an interview with CNBC's “Squawk on the Street” May 29.

Hastings stressed that Netflix was better off independent, working on all platforms and devices. “The value of Netflix is when it’s on every screen,” he said during the wide-ranging interview, which covered competition with Amazon, viewership of the newly released season of “Arrested Development” and how Netflix is mirroring HBO.

“When you think about it, this is how HBO got started,” Hastings said, regarding Netflix’s push into original programming. “Twenty years ago HBO was just showing other people’s movies, and then it expanded [with] these amazing originals, and we really [look] at that for inspiration and say, ‘What can we do on the Internet, and do even more than HBO?’”

Original programming is helping with subscriber growth and growing margins in the United States, “and we’re using those margins to expand more aggressively internationally,” Hastings said. Netflix is now available in 40 countries.

Hastings said subscriber viewership of “Arrested Development” — which debuted during the Memorial Day weekend — met all of Netflix’s expectations. However, he would not disclose specific viewership numbers for the show.

“We’re not trying to get all the people to watch it the first day it comes out,” Hastings said. “We’re not focused on the day-one ratings.”

Hastings said Netflix wants to focus on the ratings for the show during the course of a year. He added that if the cast of “Arrested Development” was interested in doing another season for Netflix, the company would likely oblige.

With Amazon beefing up its original content programming as well (announcing five new original shows earlier in the day), Hastings acknowledged content costs are going up.

“If we grow the subscriber base — and we’ve been growing it tremendously — … then we can afford more content without [raising subscriber] prices,” he said.

Netflix has no immediate plans to raise prices, Hastings said.

Netflix and Viacom didn’t renew their licensing deal earlier this month, resulting in the loss of tons of children’s content, including the popular “Blue’s Clues.” However, Hastings stressed that the company still has a tremendous amount of children’s programming from other companies.

“There’s nothing we can do about it. Some shows come out of the window. … There’s this whole windowing system that Hollywood has,” he said. “We’re doing our best.”

When asked whether Netflix could offer member-only kiosks similar to Redbox, Hastings said Redbox was doing a fine job with the DVD rental kiosk business (“That’s what they know,” he said), but “That’s not our focus. Ours is really around doing Internet streaming better than anyone’s ever done,” Hastings said.

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