Close followers of Netflix should watch the speech that Reed Hastings, its founder and chief executive, delivered in Berlin last week. It’s a guided tour to the future of TV, at least as he sees it.
The video is embedded above, and if you’re looking for the predictions, they start at 18:30. Prior to that, Hastings talks about career lessons from prior jobs and the early days of Netflix.
Netflix is generally quite open about its strategy. Its “long term view” document (and the changes to it over time) have long served as public guideposts for the streaming video company. But in the last few years, some of the central tenets of that strategy—for instance, “Internet TV is replacing linear TV”—have transformed from visionary to conventional wisdom. So while the rest of the industry catches up to that new reality, the most interesting question in digital media right now is how Netflix sees it developing from here. What’s the next act?
In Berlin, speaking at the Re:publica conference, Hastings essentially gave traditional television two decades to live: “We will come to see that linear TV declines every year for the next 20 years,” he said, “and that internet TV rises every year for the next 20 years.”
Over that time, Netflix will focus more on producing original content and owning the global rights to distribute those shows and movies. The company aims to launch in every country by the end of the 2016.
Netflix’s original programming will include experiments with new video formats. Hastings described the challenge this way: “As we produce for the internet, how can we do this is nonconventional ways?” He mentioned unconventional episode lengths, interactivity, and virtual reality: “Over the next 5 and 10 years, as we get fully global, we hope to pioneer much of that.”
Hastings wasn’t asked about reports that Apple will unveil new hardware and software for television viewing next month, but he did say that television sets in the future “will look like a large iPad,” with an array of apps. His contention, which we share here at Quartz, is that TVs are just glass-panelled displays connected to the internet.
He reiterated Netflix’s focus on TV shows and movies, saying other companies will do a better job at other forms of entertainment, like sports. Still, he offered a view for how sports will also shift from traditional to internet TV. “Sports will probably be by league,” he predicted, meaning viewers will use the NFL’s app to watch American football rather than tuning into CBS, Fox, or another network.
Hastings also said the rise of 4K ultra-high definition video will help push more sports programming to the internet. By the next FIFA World Cup in 2018, Hastings predicted, “Much of the world will watch the World Cup in incredible video quality over the internet.”
Touching on other topics, Hastings said…
- Spending $100 million on House of Cards, Netflix’s first original show, was the scariest moment of his career: “At the time, that was an intense debate, and we almost didn’t do it.”
- Netflix’s ill-fated decision to spin off its DVD service into a separate company, called Qwikster, “was a catastrophically bad decision, and it almost killed us.” But he spins the episode into a quotable business lesson: “The same bravery that almost killed us is the bravery that allows us to be innovative.”
- The deals that Netflix struck with some internet providers in the United States for faster service were a “deal with the devil.” He has previously said he regrets the deals, but not in quite those terms.
- Don’t believe rumors about Netflix’s interest in certain shows: “What happens in Hollywood is that if you want to sell a show you plant a rumor that Netflix is going to do it.”
- Netflix will always focus on streaming, rather than allowing customers to download video, to keep its service simple and anticipate improvements to internet service that will render the distinction moot: “The discipline of great product design is to figure out what are the important cases in the long term…. Great product design is saying no to things that are good.”
The nearly hourlong appearance didn’t break any news, exactly, but it was one of the most revealing speeches Hastings has delivered in a while. Perhaps that’s because Netflix seems to be at a moment equal in significance to when it shifted focus from DVDs to internet streaming. Its central thesis about the rise of internet TV having proved true, but it now has to capitalize on the implications of that shift.
“Sometimes things are very stable,” he said, “and then they change a lot.”