Netflix isn’t afraid of competition from Disney’s upcoming direct-to-consumer offering, executives told investors Monday. “We don’t see it as a threat to us any more than Hulu has been,” said Netflix CEO Reed Hastings during the company’s Q4 2017 earnings call. He added that he’d expect Disney’s service to be “very successful” because of the company’s brands and content.
“I know I’ll be a subscriber of it,” Hastings admitted.
Disney announced last summer that it plans to launch a Disney-branded video subscription service in 2019. As part of that effort, Disney chose not to renew its distribution agreement with Netflix, which means that theatrical releases from 2019 on will stream on Disney’s own service instead. And in December, Disney announced the planned $52.4 billion acquisition of 20th Century Fox, which could ultimately further bolster Disney’s service.
“I was as surprised as anyone that Fox was willing to sell,” Hastings said. But he also tried to assure consumers that the impact of the deal will be minimal. “These big U.S. media company mergers are pretty peripheral to us,“ he said.
Hastings also argued that Netflix won’t feel much of an impact of Disney movies disappearing from the service. “It’s great content, but we are able to grow without it just fine,” he said, adding that the current output deal had been limited to the United States.
Asked whether further media mergers could eventually cut off the supply of new titles to Netflix, Hastings responded: “If we can monetize content really well, then people will sell to us because we can pay them.” He added that this was one reason for Netflix to increasingly strike direct deals with directors and producers, as opposed to studios: “Our exposure is significantly less than it used to be.”
Hastings made these remarks as his company announced that it added 8.3 million new streaming subscribers in Q4.
Netflix’s Q4 2017 letter to investors also called out Amazon and Apple as competitors in the market for ad-free premium streaming content: “Amazon Studios is likely to bring in a strong new leader given their large content budgets, and Apple is growing its programming, which we presume will either be bundled with Apple Music or with iOS.”
The letter also made note of ad-supported video services, including Facebook’s growing investments in video — but argued that these could actually help Netflix grow its audience: “With their multi-billion global audiences, free ad-supported internet video is a big force in the market for entertainment time, as well as a great advertising vehicle for Netflix.”
During the earnings call, Hastings argued that Netflix had a significant first-mover advantage over its competition. “We’ve got a path ahead, everyone else in streaming is trying to find one.” He added that ultimately, the streaming market wasn’t a zero-sum game. “We’ll all learn from each other and total streaming will grow faster because of the competition.”