Here’s a streaming media analogy to wrap your head around: Netflix is like Starbucks, and Amazon is like Walmart.
That’s what Netflix CEO Reed Hastings told CNBC Wednesday in regard to competing with Amazon in the streaming industry.
Hastings was asked if Netflix wants to leverage its subscriber base for something other than the company’s core content offering. Netflix reported 98.75 million subscribers in its earnings report last month — up from 81.5 million last year — and just crossed the 100 million mark.
“If we try to out-Amazon Amazon, then that’s a losing battle,” Hastings said. “What we have to do is be the speciality play; we are trying to be Starbucks and they are trying to be Walmart. We have to have brand-intense love and focus. What they do is incredible at their breadth. We want to focus on how we can be the embodiment of entertainment, joy, movies, and TV shows.”
Netflix still maintains a clear lead in the streaming space, but competitors like Amazon and YouTube are catching up. Amazon, which offers its video catalog to subscribers of its $99/year Prime membership program, is expected to invest $4.5 billion in video content this year; Netflix said last year it expected to invest $6 billion in 2017.
Hastings also said Amazon is “awfully scary” in response to a question about the company buying NFL streaming rights for a reported $50 million.
“Everything Amazon does is just so amazing,” he noted. “How are they doing so many different business areas so well? It’s like they are trying to repeal the basic laws of business, of limited capability. We’re continuing to watch them and be impressed with them — and they are helping to grow the industry because they are investing in the content.”
The Netflix CEO said his company isn’t looking to stream live news or sports like Amazon or Twitter, and instead plans to keep focusing on its bread and butter: movies and TV shows.
“It’s things that you want to repeat view — things that you don’t only want to consume once,” he explained. “The Warriors and Cavaliers are going up again [in the NBA Finals], and people will be intense on that. But then afterward there’s no after-viewing, whereas with our shows there really is.”
Recent data from comScore found that more than half of U.S. households connected to the internet watch video on at least one over-the-top service. Of the 49 million homes, Netflix reached 75 percent, YouTube was viewed in 53 percent of households, Amazon reached 33 percent, and Hulu trailed behind at 17 percent.
Netflix added another 3.53 million subscribers internationally last quarter, along with 1.42 million in the U.S. The company also posted $2.64 billion in revenue — which met analyst estimates and is up 34 percent from last year — and diluted earnings per share of $0.40, which beat estimates and is up from $0.06 last year.
Netflix expects to add 2.6 million subscribers internationally this quarter — it launched in 130 additional countries last year — and 600,000 subscribers in the U.S., both which exceed analyst estimates.