What Netflix CEO hopes U.S. won't notice
'Self-absorbed' Americans may ignore Canada price disparityNetflix is now in Canada, offering local subscribers an online movie and TV streaming service for $7.99 a month. The move marks the first international foray for the California-based online streaming/DVD-by-mail giant. Etan Vlessing caught up with Netflix co-founder and CEO Reed Hastings in Toronto as he reaches beyond his 15 million American subscribers to start rolling out his online subscription service around the world.
The Hollywood Reporter: You're looking beyond the U.S. border for growth. Where will you expand next after Canada? [Related: Netflix hires actors to pose as consumers at Canadian launch event.]
Reed Hastings: For now we're focused on Canada. If we succeed in Canada, we will certainly look at other markets. But each market is unique, and what attracted us to Canada is great broadband, and a great love of movies and TV shows.
THR: American services when they enter the Canadian market typically charge the locals more than they charge stateside. Why the discount for Canadians?
Hastings: We want to provide an incredible value for Canadians, and it's the lowest price we have anywhere in the world for unlimited screenings. And anyone can try it for free for a month. It's pretty addictive.
THR: Are you concerned that American Netflix subscribers will look north and ask for the same discount Canadians get at $7.99?
Hastings: How much has it been your experience that Americans follow what happens in the world? It's something we'll monitor, but Americans are somewhat self-absorbed.
THR: How will you will measure success for Netflix Canada?
Hastings: I'm certain we'll succeed, so it's kind of a matter of degree. We're not quantifying that in terms of subscriber numbers or profitability. What we're focused on is getting out there. We've got to get out on all of the devices, get the word out, and we need to be such a good service that people not only stay with us but rave to their friends about it.
THR: After Canada, where else will Netflix expand internationally?
Hastings: We're really open-minded, whether that's western Europe, Latin America, Asia or Russia. It's unlikely to be Africa, but other than that, all continents are open.
THR: The knock on Netflix is you offer mostly library content. Are you looking for more Canadian subscription revenue before you pay out for newer content? [Related: The network that won't stream its shows on Netflix.]
Hastings: Yes and no. In the States, it's mostly older content also on streaming, and it's been wildly successful. And where we add unique value, a new option, is making the great TV shows and the great movies from around the world available. When we just do the new hot show that's already on TV, and anybody can get it there, there's less added value for us. And we're not trying to be the only option that Canadians use. We're trying to be one more supplemental option, so Canadians will watch some over-the-air TV, have cable or IPTV, and rent or buy DVDs.
THR: Your new Canadian competitors like broadcasters and cable operators offer sports. Any chance Netflix will offer that?
Hastings: Very unlikely. Our brand at Netflix is really focused on movies and TV shows. And sport rights are a very different group of rights. In the States, there's ESPN3, and each country has different options, and other than premiere league football, there tends to be very little global content. And movie and TV rights are pretty broad content.
THR: Is the Canadian market any different than the U.S. in terms of consumer patterns?
Hastings: No, it's pretty universal, the attraction to great value and the low price, and the unlimited. And I can't emphasize the unlimited enough. To be able to do the on-demand for a flat fee is just wonderful for people. And I think that will be true in nations around the world, including the States and Canada.
THR: So the U.S. and Canadian Netflix services are identical?
Hastings: It's identical in terms of interface and how you sign up. The content is unique to Canada as we have to license it separately. And in the States, there's also the DVD-by-mail part, which will only be in the States.
THR: Why not expand the physical DVD delivery service into Canada?
Hastings: There's a finite market for DVD-by-mail, and the growth over the next 10 years will be in streaming. If we were starting out in the States now, we would do the same thing and focus on streaming.