In Netflix CEO Reed Hastings’ vision of the future, traditional TV and channels will disappear — superseded by Internet-video services and apps, which will become the way everyone watches entertainment, news and sports.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