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Netflix’s New Chutzpah: It Wants to Be as Big as YouTube

Maybe Netflix is getting too big for its britches.

The company used to compare itself to HBO, with the narrative that Netflix wanted to become HBO faster than the other way around. After leaving the premium cable TV stalwart in the dust — Netflix is about to motor past 100 million subs — it has a new benchmark of bigness: YouTube.

Netflix’s “viewing is very large and growing, but nowhere near as big as YouTube,” CEO Reed Hastings told analysts on Monday’s quarterly call. “So we definitely have YouTube envy and we’ve got a lot a room to go.”

Hastings later added: “YouTube announced they were 1 billion [hours] a day, and when we looked it up we’re a little over 1 billion a week. So we’ve got a long way to go to catch up to YouTube.”

It almost sounds like a Trump-esque vision to build the biggest (bigliest?) and flashiest thing, regardless of economic realities.

Let’s start with the fact that, as the Brits say, Netflix and YouTube are chalk and cheese. Their business models, their content mix, and their user bases are vastly different. An hour of video viewed on Netflix is tied to an entirely different value structure than an hour spent on YouTube, which largely gets its content for free. Netflix is set to spend $6 billion on content in 2017 — and another $1 billion marketing it.

Sure, any digital media biz covets the billion-plus-consumer reach of Google and Facebook. But how useful — and realistic — is it to strive for that incredible level of scale? By aiming to meet or exceed YouTube’s raw video tonnage, Hastings has revealed that he thinks the sky’s the limit for Netflix.

Asked how long it would take for Netflix to hit 200 million, after reaching the 100-million milestone after a decade, Hastings chuckled and said, “Shorter than the first 10 [years], for sure.” Well, we’ll find out.

Look, setting moonshot goals is important for any enterprise; Amazon is a a great case study in aiming high and sticking to a North Star. But those long-range objectives need to be the right ones. The danger is that Netflix will keep spending as if the next 100 million subs are fait accompli — and those eyeballs fail to materialize.

Netflix believes it can, eventually, have a regular cadence of original content that appeals to just about anyone on the planet. Here’s Hastings again: “The thing is, everybody watches TV and nearly everybody has the internet. So I don’t see anything that’s going to stop Netflix from getting to most people in the United States and then eventually hopefully most people around the world.”

Ted Sarandos, Netflix’s chief content officer, said on Monday’s call that in Q2 the service — every week — will launch a new season of a show, a comedy special, documentary, or kids’ series. “This is the idea the chance that you’re going to connect with somebody and it becomes their favorite show,” Sarandos said.

It’s a sensible strategy. But we’re in a world with an overwhelming number of entertainment choices (“we’re competing with sleep on the margin,” said Hastings). The real question is whether Netflix can cost-effectively churn out exclusive TV shows and movies that will hit the diverse tastes of a global audience. And do it every single month.

In its current long-term vision statement (last updated Jan. 18), Netflix says it is “a focused passion brand, not a do-everything brand: Starbucks, not 7-Eleven; Southwest, not United; HBO, not Dish.”

To that point, Hastings & Co. should keep in mind that the company is Netflix — not YouTube.

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