Netflix’s Hastings: Traditional TV Is Going to Die

Reed Hastings
Felipe Caicedo/ Getty Images

CEO says Internet TV and apps will win in the long-term, while he also gives hat-tip to nets like HBO and ESPN

In Netflix CEO Reed Hastings’ vision of the future, traditional TV and channels will disappear — superseded by Internet-video services and apps, which will become the way everyone watches entertainment, news and sports.

At the same time, Hastings is not predicting that the Internet will wipe out the TV biz. In fact, in a “long-term view” manifesto posted Wednesday on Netflix’s investor-relations page, the company gives props to cablers like ESPN and HBO for “leading the way” in making the jump from the old channel paradigm to TV Everywhere.

Sure, you would expect an exec who’s betting hundreds of millions of dollars — actually, Netflix has $5.7 billion in content-licensing commitments over the next few years — on broadband video to espouse such a belief. But the thing is, he’s right: The only real question is how quickly the full transition will happen.

“Over the coming decades and across the world, Internet TV will replace linear TV,” according to the doc. “Apps will replace channels, remote controls will disappear, and screens will proliferate.”

“Existing networks, such as ESPN and HBO, that offer amazing apps will get more viewing than in the past, and be more valuable. Existing networks that fail to develop first-class apps will lose viewing and revenue,” Netflix’s vision statement said.

The 11-page doc was not signed by Hastings, although he obviously runs the show; a rep said the essay represents the company’s vision rather than his personally. In it, Netflix notes that some large pay-television providers have created their own multichannel video apps for viewing all of the networks they carry, including Comcast Xfinity. “These will win viewing also, by offering a great Internet on-demand experience on multiple screens,” according to the document, which added that so far, individual nets like HBO are ahead today “because consumers relate to the network brands, and the apps are tailored to the specific content type.”

Today, millions of consumers love traditional TV, Netflix acknowledged. However, “people don’t love the linear TV experience where channels present programs at particular times on non-portable screens with complicated remote controls… While hugely popular, the linear TV channel model is ripe for replacement,” the company said.

Ultimately, Hastings’ point is that Netflix is well positioned for the Internet TV world of tomorrow, as he’s defined it.

“People love TV shows & movies,” the doc said. “We love being the best possible place to enjoy them. Ours is an amazing opportunity to grow, innovate and lead for several decades. We know we will have great competition along the way, and we embrace the challenge.”

Full document, on Netflix’s investor relations page, is available here.

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  1. Miffy says:

    He’s 100% right. Go look at how the millenials get their entertainment. It’s not via the traditional broadcast and cable model. On-demand.

  2. Captron Igloo says:

    Reed Hastings is channelling Ric Romero, I see.

  3. Traditional TV will NOT be replaced by internet TV. Internet TV is to traditional TV what the DVD was to the movie business…an additional revenue source….until it was replaced by Netflix.

  4. Being in Television from 1981 t0 2001 . I have seena lot of changes . But this man is right. Our GM said in the early 90’s that cable was gonna explode and do some damage and it did. But the problem is I don’t want to pay for stuff I don’t need. It someone is sdmart and not a greedy as most of the content providers are and work together and develop a model where you canb pick and choose and it was avaliable now I would be willing tyo pick and choose and spend up to a $100.00 a month for at least 40 or 50 channels I want. Not a sport fan.I don’t care to pick up the tab so the sports nuts can get Nascar,ESPN or anything like that or MTV and crappy fitness channels and other crap like cooking shows. But thats just me and I don’t speak spanish and don’t care to learn . Im a english speaking born american. Come to my country and learn our language. You see SAP being for spanish.Why doesn’t the spanish channels use SAP for english. Yeah call me racist but tats the way i feeel and for HD i would pay for that as well . I had DTV from 1997 to 2007. !st day after getting it and watching it for a few hrs realized there was still nothing good on. Just give me the customer the choice to choose what I want and don’t piggy back the crap on my cable bill. Which I haven’t had since 2007 I get free off air and Net Flix off internet and dvd demileered and we make a movie night out once in awhile . a real night out Movie then a nice dinner with what we save in having not pay the DTV bill or Cable.

    • quinthas says:

      “Come to my country and learn our language. You see SAP being for spanish.Why doesn’t the spanish channels use SAP for english”
      LoL, your country? How about you get an education then learn some grammar and punctuation before you go around spewing your hate?

  5. Joe Smart says:

    Netflix doesn’t make a profit on its streaming business. How is Netflix positioned to provide television in the future if their primary business doesn’t make a profit? I know I’m not a former business major but I don’t understand why people keep buying up the stock of a company that isn’t making a profit except on the stock market.

    • In point of fact, Netflix *is* profitable. In Q1, it reported U.S. streaming operating profits of $131 million (20.6% margin). International streaming is operating at a loss as NFLX funds expansion overseas, & it has negative free cash flow. Overall, the company has been in the black last four quarters, albeit by slim margins.

      • No question, Netflix is highly leveraged & its model depends on continued subscriber growth. But accounting “tricks”? The long-term commitments don’t belong in P&L.

      • Joe Smart says:

        Netflix only appears to be profitable because of accounting tricks. According to multiple sources including Forbes and Bloomberg Netflix isn’t listing over 3 billion dollars in financial commitments on its balance sheet. Netflix claims it doesn’t have to list these liabilities because they are for titles that aren’t available to stream yet or titles for which a fee can’t reasonably be determined at this time. The 3 billion Netflix isn’t listing dwarfs their supposed profits of 131 million by quite a bit.

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