Netflix CEO Reed Hastings probably won’t win a CEO of the Year award for his efforts in 2011.
After all, he was largely responsible for one of the biggest strategic and branding disasters of the year when he jumped the gun on trying to move his company away from delivering DVDs by mail and focusing on streaming instead.
Despite the mistakes Netflix made last year, however, the company continues to stream insane amounts of content to its subscribers, and Hastings continues to look towards the future.
On Tuesday, at the Morgan Stanley Technology, Media and Telecom Conference in San Francisco, Hastings made an interesting prediction. As paidContent details, the Netflix CEO suggested that “cable will eventually become an on-demand internet platform” and Netflix will be part of a consumer’s cable bundle.
“It’s not in the short term, but it’s in the natural direction for us in the long term,” he said. But “many (cable service providers) would like to have a competitor to HBO, and they would bid us off of HBO.”
From his perspective, offerings from cable networks which seek to bring television to every screen, like HBO Go, pose the greatest competitive threat to Netflix. That’s why instead of worrying about the rumored standalone streaming service from Amazon.com, Hastings worries about original content. As Hastings sees it, original content “hedges us against that longterm TV Everywhere threat.”
So is Hastings right? Maybe, although one might argue that he’s a little to dismissive of the competitive threat Amazon could pose. After all, Amazon has a lot of money to successfully arm itself with content, and it’s doing more with original content too. Producing original content is expensive, and Netflix can’t afford to lose too much third party content, so one thing seems certain: the economics of running Netflix are going to change, and perhaps not for the better, if Hastings’ vision is to be realized.