From being a math teacher in Swaziland,Reed Hastings, chairman, CEO and co-founder of Netflix, has come a long way. After disrupting TV viewing in the U.S. and Europe, Netflix started streaming in India two years ago and has created a niche for itself for high-quality TV series and Hollywood movie content for the English-speaking audience in the country. But now, the entertainment platform is shifting gears to create local content aimed at a wider viewership. In an interview, he dwells on the company’s strategy and on things that dominate the Internet space. Excerpts:
How has India shaped up for Netflix?
We have had a great start in India. The first stage for us was launching in India and that was two years ago.
We are now in the second stage doing Indian content and then sharing that around the world.
It’s just a great time to be an Indian Internet consumer. The membership growth for Netflix here has been fantastic. Although, we don’t give membership numbers by country, if you look at our international segment, it’s now larger than the U.S. So, it’s growing very, very quickly.
Local and regional content is important to get more users but how do you balance it out with demands by existing users here for more international content?
This could be a tough question for linear TV. Is this language right on this network? They have to think though a position or personality. But on the Internet, you don’t have to worry about this.
The system automatically adapts. So if you watch a lot of content in Tamil then it shows you more of that and if you watch a lot of Hollywood content in English then it shows you that.
Our job is to make sure that there is plenty of supply and then the personalisation helps to make it relevant for each person. Today, we are investing in Hindi-English crossover content which has viewers not just in India but also in the U.K., Canada, the U.S. and throughout the Middle-East and even Africa.
At Rs. 500 a month and with predominantly English content, Netflix is seen as a niche player compared with other players like Hotstar. Do you see this changing?
To some extent. Hotstar is very mass and they have different shows. Our customers watch content on Hotstar, also on linear TV and then they watch some Netflix. Nobody [offers] a total solution in entertainment because people’s tastes are very different.
We don’t have news and we don’t have sports. It’s never going to happen that we will have all of that. But if you want to watch the next episode of Black Mirror on Netflix or another show on Hotstar, sure I want to win that competition. So we call it winning moments of truth. We have to be convenient, easy and so compelling that many nights of the week you would pick Netflix.
In India, bandwidth is still an issue. Most users are still on 2G or 3G. How do you cater to them?
You mentioned our pricing and content classification so we are leaning into that category of users with 4G or home Internet. We meet the market as it becomes more 4G and fibre to the home.
Now we can do a very good quality picture on a mobile phone at about 250 kilobits so it is quite efficient. Someone who is on 3G perhaps has data caps. Technically it can work on 3G but in practice the sweet spot for us are the consumers who care about the Internet. They are not just watching us but also YouTube and Hotstar.
Many platforms are going big on live events. Recent IPL auctions saw even Facebook bidding for digital rights. Do we see live events on Netflix?
No way. What we want to do is great stories that help you understand culture, people, drama, love, pain. Think of this as an emotional product and we have got so long to go. Maybe you can ask me again after we have produced in the top 10 Indian languages, localised in 20, and we are all over the world. Maybe someday we will look at live events but we have decades to work on to really become great. We are a passion brand. Other companies, like Amazon, are amazing and into many categories. Some day they will get into self-driving cars too. They work very broad. We work very deep.
Would data analytics and artificial intelligence be able to predict a TV show that everyone would want to watch, in the future?
One of the last things that AI will master, even after 50 years from now, will be human emotion. That is — how do you tell a story that makes you laugh or cry. If you wanted to watch a story that is like another story, then computers would help you do that. But that’s boring. You want to watch something fresh. That’s why we are about human creativity. AI would be great for practical things like self-driving cars. We can use machine learning in some places like adaptive streaming and we do that.
Platforms like Netflix also have an impact on family life. It’s impacting our sleep patterns as users go on binge watching. Are you worried about the unwanted fallout?
A hundred years ago, we didn’t have electricity; everyone played music together. TV changed things. Every technological change always brings two steps forward and one step back. It’s never purely a good thing.
But it’s mostly positive. It’s like you have cars which is great for transportation but then you also have people dying of accidents. Then we learnt to be secure with things like seat belts. So with respect to the Internet, we are in the first phase. We are still learning as a society to adjust to some of the crazy things online but no one wants to go back to the pre-Internet era.
Every technological change brings [you] two steps forward, one back. It’s never purely a good thing