For Netflix CEO, Change Is Just A Channel Thing Reed Hastings is the guy who brought you those little red envelopes — and the ubiquitous phrase, "It's in my queue." But he knows as well as anybody that his company's future will involve making those mailers a thing of the past.
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For Netflix CEO, Change Is Just A Channel Thing

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For Netflix CEO, Change Is Just A Channel Thing

For Netflix CEO, Change Is Just A Channel Thing

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ARI SHAPIRO, host:

Going to the movies used to require commitment. You had to go to the theater, buy a ticket, find a seat among the masses. Well, that was before the VCR, the DVD player, before mail-order movies, before streaming. So to talk about how we'll watching movies in the coming years, we've turned to Reed Hastings. He's CEO of Netflix.

Thanks for joining us.

Mr. REED HASTINGS (CEO, Netflix): Thank you.

SHAPIRO: You're running a business in which you expect one of your main products, the DVD, to be obsolete sometime soon. How do you do that?

Mr. HASTINGS: Well, it's all depending on your definition of soon, so we think DVD's continuing to grow for the next couple years. But you're absolutely right. In the next 10 or 20 years, all the consumers will be streaming movies over the Internet.

SHAPIRO: Talk to me a little bit more about the streaming, because I have to tell you, I have a Netflix queue with maybe 20 movies on my list. And if on a given night I decide I want to see something that's at the bottom of that list, I will often go to stream that movie and find that neither it nor any of the next 10 items on my Netflix queue are available for streaming.

Mr. HASTINGS: When we look at streaming, the thing to remember is that televisions over the next 10 or 20 years will be increasingly Wi-Fi equipped. And what we're going to find is Web browsers built into televisions, so that then, from your laptop and from your television, you'll be able to view, essentially, any movie.

Though right now, there's only a few televisions that are so equipped, and there's only a few titles that are available.

SHAPIRO: What keeps more titles from being available?

Mr. HASTINGS: Mostly the economics. As the number of streaming users grow, then we're able to pay for more and more movies. So the more users we get, the more content that we can get, which again, attracts more users.

SHAPIRO: I see.

Mr. HASTINGS: And when we buy a DVD, we can buy it from Wal-Mart. We can buy it from Costco. We can buy it from the studio, and we can rent it. But in streaming, you do individual deals with each content owner. There's movie studios. There's also television networks. But for each content producer, we have to do an individual deal with that content producer for that piece of content.

SHAPIRO: Well, how far off do you think the day is when whatever somebody might want on their Netflix queue might also be available for live streaming?

Mr. HASTINGS: Oh, I think we're on a trajectory over probably 10 years to have nearly everything on streaming - and not just Netflix, but other firms, also -and also to have Wi-Fi built into every television over 10 years.

SHAPIRO: So what comes next after streaming that I may not be thinking of, but you are?

Mr. HASTINGS: Oh, that's like the little crystal chip that someone implants in your ear and has every piece of music and video ever recorded.

(Soundbite of laughter)

Mr. HASTINGS: And if you ever think about a song, then you owe the record companies a penny.

SHAPIRO: I'll get movies projected onto my retinas?

Mr. HASTINGS: Exactly.

SHAPIRO: How long do you think until I can get a Netflix streaming movie on my mobile phone?

Mr. HASTINGS: That may be a few years, because we're still focused on the televisions. And for us, the laptop and the television to bigger screens, and then comes mobile. So it's definitely in the pipeline, but not in the short term.

SHAPIRO: You've put a lot of emphasis on user recommendations. You have the Netflix prize, where you offer a million dollars to a computer programmer who can come up with the best algorithm to recommend movies that a user will like. Why the emphasis on this particular aspect of the experience?

Mr. HASTINGS: For most people, when they watch movies, maybe one in four movies that they see, they absolutely love, they rave about. And what we're trying to do is make it easier and easier to choose, so that then it becomes one out of three and one out of two and maybe someday two out of three of the movies that you watch, you just rave about.

SHAPIRO: What's your favorite way to watch a movie?

Mr. HASTINGS: My favorite way to watch a movie - I'd have to say I'm still biased to the movie theater.

SHAPIRO: Really?

Mr. HASTINGS: Yeah. There's nothing like you know, going to the theater, especially for comedies, and you know, the whole audience laughing.

SHAPIRO: Reed Hastings is CEO of Netflix. Thanks a lot.

Mr. HASTINGS: Thank you.

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