Reed Hastings is an American entrepreneur and philanthropist. He is the co-founder, chairman and CEO of Netflix and serves on the boards of Facebook and a number of non-profit organisations. Hastings, 58, in an exclusive interview to CNBC-TV18 discussed his Indian plans and upcoming series. n pricing, he said the company has no plans to cut subscription prices in India and it was testing smaller pricing plans in other countries. Playing down growing competition between major over-the-top (OTT) players like Netflix, Amazon Prime Video, and Hot Star, Hastings said that there was a place for everyone in the market.
Watch the video here: Edited Excerpts: It is not just India, you have announced 17 new titles across Asia over the span of 12 months, is it official yet, is it fair to say that Asian market is the new blue-eyed boy?
It is a big success for us. We are investing now in more series like
Sacred Games. It has been such a success, we have Kingdom coming out of Korea that we think is going to be a big success, anime titles out of Japan and of course, all the amazing European content like the Ground and out of the US like House of Cards. But Asian content, especially with regard to India, given that you announced this blitzkrieg of Indian titles, what is the blueprint like, what are you looking to in terms of a run rate? How many titles per year are you possibly targeting going forward in the next three-four years?
We have been so fortunate to grow in India over the last three years since we launched and the larger that we get, the more we can afford on content. So that depends on how much we continue to grow, which looks very promising.
As we do new titles, that fuels our growth. So it is that virtuous cycle that we are on. So we are trying to take both movies and do an incredible job with them and do television produced with movie production values like
Sacred Games though it looks like a television production. Considering you have already announced eight for 2019, can we expect it to replicate that is in the next year, are you looking to match that or go higher, what is the target?
Every year we try to do more than we did in the past. So look for us to do that but we are really focused on quality. We would rather do just a few things that were incredible rather than a whole lot. So we are more focused on whether it is some great stories, unique ways of telling them, great production values, so it is focused on spectacular.
As we speak about India and the kind of promise this market has, you have bet big on it given the fact that you have launched these titles with some A-list names, you have roped in some well-known names in the cinema industry here to make these movies for you, but going forward, there has been so much talk about the need to set up the pre-screening committee to monitor the nature and digital content that goes on Netflix or any other portal for that matter. Does the possibility of regulation in the future upset the way you do business in India?
Many countries around the world have tight regulation on broadcast because it has pushed into everybody’s home but on the internet. Each customer gets to decide what they want to do on YouTube, on Netflix, on Hotstar and on many other sites and so the customer is in control and then we allow much parental control so you can block shows for your kids, you can set maturity level, no advertising on Netflix. So the government may eventually have concerns about open internet but Netflix is the least concerning of the internet.
You feel the government has no reason to perhaps interfere as far as this is concerned over the top content?
Each government gets to make its own choice. It is not for me to decide but it is really about the internet and what is going to happen there and then we are very safe. We do not have any advertising, we have parental controls. So regulation is around some of the dark corners of the internet.
Reports have emerged in the last few weeks back in India that Netflix is currently considering lowering prices as far as subscription is concerned in India. For a long time, you were very happy with your prices. You didn’t see the need for change. Was that decision, that consideration rather a direct result and function of growing competition back home?
Netflix is inexpensive, it is only Rs 500 a month. Its two movie tickets and that is for a whole month. So we are very happy with the pricing and our Indian members are. We have got three tiers -- Rs 500, Rs 650 and Rs 800 -- and the bottom tier is not the most successful. So there is no pricing issue.
So you are not reconsidering lowering prices at all?
No. What got announced is that we are testing in some other countries, not in India, some smaller plans. But really the focus is, not so much on the pricing, it is on what is the content that you want to see.
And yet your competitors back in India have far fewer tariffs?
No. Most of them are free; I mean Hotstar is free, YouTube is free.
But even the paid models have much lesser, it is only Rs 160, Amazon Prime Rs 1,000 for a year. So are you happy catering to a certain premium level in terms of viewership?
We are more like movies. When you think about movies in India, it is usually Rs 200-220. So we are those kinds of production values and you can watch 10-20 movies in a month. So that is the focus; to be more premium, no advertising and that way.
Amazon Prime, of course, recently announced Rs 1,000 crore investment both in acquiring Bollywood titles and making original content of its own. And you announced blitzkrieg of Indian titles. Netflix originals with their origins in India. Is the competition well and truly heating up and what is this change in the way Netflix does business in India?
When you think about Hotstar, when you think about all of linear television, Amazon, it is great for creators. There are so many opportunities to be a young rider and get discovered now. So success is not only in India, it is also with its content around the world.
Sacred Games has been very successful throughout the world. So we just see that the internet is unlocking this human creativity and so sure you can think of it as a big battle but you can also think of it as many choices for customers. So there is a place for everyone, is that what you want to say?
Absolutely and we have seen this in the US, Amazon is huge in the US and so is Netflix.
That is quite magnanimous of you?
Look, I use Amazon Prime every week. So it is a great service.
Do you have any plans of occupying and setting aside a market share target for yourself as far as India is concerned, is there a number that you would like to get to as part of your short-term to medium-term plans?
As I talked about it before, we see the long-term potential to get to 100 million members. So it is very large. We are about 130 million so far globally. So we have got a long way to go but we don’t have a specific timeframe. If it takes 10 years, that is fine. We will spend the time continually investing. Remember, the internet is getting so much faster in India and so much less expensive. It is the biggest expansion of the internet in any country in the world.
So 100 million, that is the target with no set timeframe?
There you go.
I also have to ask you, your financial year 2018 as far as the Indian financial year is concerned, revenues came in at around Rs 58 crore, your profits were a wafer-thin margin of around Rs 20 lakh, at what rate do you see yourself grow in the next five years?
We hope to continue to grow very quickly. I am happy with the growth, but it is all about, do we do the content that people want because if we do more like
Lust Stories, like Ghoul then everything will be great. So we just have to focus on the best content. The industry is expected to grow at 22.5 at least that is what PricewaterhouseCoopers says, do you expect to grow faster than the industry, on par with the industry, what is the expectation?
I would say the industry is very dynamic. There is a lot of things changing, all of grow and that industry number turns out to be quite larger.
We have been very pleased with this last year and the response to our original content, more people are joining Netflix in India and around the world. So we are continuing to invest. So it depends on can we continue that cycle, where we have more content and more people join.
You are not giving me a number that you expect to grow at. What size do you see the Indian market is placed at in the next three-five years? One study says, $800 million by the year 2022 and Deloitte study says that close to Rs 3,500 crore could be the investment alone as far as original over the top content is concerned. What size do you see this behemoth going from here on, is there potential to grow bigger and better than what we have already seen in the last few months and years?