The comments come from Hastings’ investors’ letter, following the release of Netflix’s Q3 results – where it saw a larger-than-expected increase of 6.77 million subscribers.
Despite positioning Netflix as the market leader, Hastings said that “we believe we’re less than 10% of TV screen time in the US (our most mature market) and much less than that in mobile screen time.”
On the competition posed by existing players YouTube, Hulu and Amazon, along with the upcoming Disney+, Apple TV+, HBO Max and Peacock, Hastings said: “While the new competitors have some great titles (especially catalogue titles), none have the variety, diversity and quality of new original programming that we are producing around the world
Speaking during a Q&A after the release of the results, Hastings added that “all four of us (Netflix, Hulu, YouTube and Amazon Prime Video) have been competing heavily, including with linear TV for the last 12 years,” and that the new competition from Apple and Disney is “fundamentally more of the same.”
Of the two new entrants, Hasting’s comments suggest that Disney is viewed as a bigger threat to Netflix than Apple. “Disney is going to be a great competitor,” Hastings said. “Apple is just beginning, but they’ll probably have some great shows, too.”
Despite this, Hastings said that all of the major OTT players are still in competition with traditional TV. He said: “But again, all of us are competing with linear TV. We’re all relatively small to linear TV. So just like in the letter we put about the multiple cable networks over the last 30 years not really competing with each other fundamentally but competing with broadcast, I think it’s the same kind of dynamic here.”
The letter adds: “In our view, the likely outcome from the launch of these new services will be to accelerate the shift from linear TV to on demand consumption of entertainment. Just like the evolution from broadcast TV to cable, these once-in-a-generation changes are very large and open up big, new opportunities for many players.
“For example, for the first few decades of cable, networks like TBS, USA, ESPN, MTV and Discovery didn’t take much audience share from each other, but instead, they collectively took audience share from broadcast viewing.”
However, Hastings is ultimately convinced that on-demand streaming is the way forward. He said: “Over the next 10 years, many streaming services will grow viewing as streaming replaces linear TV.”
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