Reed Hastings Says Netflix Won’t Buy a Theater Chain, But Thinks Moviegoing Will Return

Talk to Netflix co-CEO Reed Hastings for more than a few minutes and he’s bound to bring up Disney. Hastings has got the entertainment giant in his line of sight as he plots Netflix’s ascendance to the top of the Hollywood food chain.

“We want to beat Disney in family animation,” says Hastings when asked what area of programming he felt that the streaming giant, which releases hundreds of titles around the world each year, has yet to master. “That’s going to take a while. I mean, they are really good at it.”

Though Hastings has called himself a Bob Iger wannabe, he approaches the job of dominating Hollywood much differently than the former Disney CEO. “Well, I don’t wake up at 4 a.m. every day,” Hastings says with a laugh, a reference to Iger’s much-discussed early bird tendencies. In somewhat unusual fashion for an executive based out of productivity-obsessed Silicon Valley, Hastings describes his role at Netflix as “sort of a cheerleader and coach, rather than executive decider.”

Hastings expands on that philosophy and several other Netflix practices that have long raised eyebrows in Hollywood in his new book, No Rules Rules: Netflix and the Culture of Reinvention, which was released Sept. 8 after its spring rollout was delayed due to the novel coronavirus. Written with author and professor Erin Meyer, the book makes the case for why unusual tactics like removing vacation policies or sharing proprietary data widely with employees have contributed to Netflix’s global success.

There are chapters devoted to explaining why candor is valuable in a workplace, the reason behind Netflix’s commitment to out-matching its rivals on employee salary, and why it remains committed to a much-discussed practice called The Keeper Test, in which managers ask themselves if they’d fight to keep an employee.

In an example of Netflix’s culture in action, the very day that the book hit shelves, Ted Sarandos, the former content chief who was upped to co-CEO in July, announced that he was streamlining the company’s televisions ranks by promoting veteran executive Bela Bajaria to vp of global TV. The promotion meant that Cindy Holland, who had been with Netflix for more than 18 years and was a key architect of the streamer’s original programming strategy, would leave in October.

“You gotta earn your job every year at Netflix,” says Hastings, who spoke with THR before the news of Holland’s departure broke. “We really model ourself on professional sports and trying to assemble the championship team.”

During a wide-ranging conversation conducted over Zoom from him Santa Cruz home, Hastings talked about how COVID-19 has changed the way people work and why Netflix likely won’t buy a theater chain.

Who is your target audience for No Rules Rules?

Very few companies are organized around employee freedom, and we wanted to set out why we’ve organized around employee freedom and how to do that. Now, there’s some benefits, which is great flexibility and great motivation, and then there’s some tricky things like how do you not have chaos? What the book really illustrates is how it’s possible to grow. We’re a little over 8,000 employees around the world and continue to invest in employee freedom. So really, the book’s for anyone in an organization who wants to think about could it work where employees have more power and more freedom and have it work out well for the organization?

You don’t worry about giving away your secrets to Hollywood?

Not too worried about Disney being able to adopt these ideas. They’ve got their own culture. But I think it will help all the smaller companies and newer companies, really, on a global basis.

I have noticed some Silicon Valley concepts seep into Hollywood workplaces. How do you think that changes the rigid Hollywood culture?

Well the thing you call a rigid Hollywood culture has also been fantastically creative and developed some of the most amazing entertainment franchises the world’s ever seen. There’s so much great to learn from the studio system for us that we’re still coming up to speed on.

What, in particular, can Netflix learn from Hollywood?

The thing that many studios are able to do is create great franchises. We’re making great progress on that with Stranger Things and other properties, but compared to Harry Potter and Star Wars, we’ve got a long way to go. We’ve got a super exciting project, Three Body Problem, we just announced that David Benioff and D.B. Weiss are producing for us. That has great potential. So, we’re getting there and we’re learning things bit by bit.

You wrote No Rules Rules before the pandemic hit. How has the Netflix culture transitioned to a work-from-home environment?

COVID-19 has been a catastrophe for our employees, just like it has for every organization. We’re all making do. It’s amazing the sacrifice of our employees who have kids at home, our single employees who are just feeling so alone. We hope that there’s no important lessons out of that because we hope there’s no more pandemics.

Do you foresee any changes to the way people work going forward?

We’re all doing a lot more Zoom calls than we were before, and I’m sure some of that will stay around. It’s just like how email came in 20 years ago. It would have happened anyway; it just probably got pulled up a couple of years.

Will the coronavirus have a lasting impact on the theatrical business?

Once COVID recedes, I’m sure we’ll go back to bars, we’ll go back to sports stadiums, we’ll go back to restaurants and we’ll go back to movie theaters.

Is this helping you land deals with filmmakers who have been hesitant to abandon the theatrical model?

We don’t want anyone to abandon the theaters, we just want consumers to have choice. Think about cooking. You can cook a great chicken at home or you can go to a restaurant and have chicken. The restaurants don’t say, well, we need to have an exclusive on chicken. Instead, they just say, we do a better job. It is great to go to a restaurant, and it’s great to go to a movie theater.

Would Netflix ever buy a theater chain?

I can’t see us doing a chain or expanding in theatrical. We want to really focus on internet entertainment and trying to just continue to improve our series, our films to make them the best in the world.

You recently promoted Ted to co-CEO. Is there a reason you were confident that would be a successful partnership?

It’s a pretty unique relationship with Ted and I. We’ve been working together for over 20 years. We’ve grown up professionally together.

How much time do you spend in Los Angeles these days?

I was in Hollywood for a couple of days last week, so it’s kind of back and forth. You know, the parable is that for Netflix’s first decade, Ted came up to Silicon Valley every week for two days. Now, it’s me coming to Hollywood every week for two days. That’s sort of the expansion of Netflix.

What type of programming would you like to see Netflix invest more in?

We want to beat Disney in family animation. That’s going to take a while. I mean, they are really good at it. We’re both very focused on building out our animation group and, you know, it’s a friendly competition. We both want to do incredible stories for consumers and we want to be able to raise the bar in that area. We know that they will be a challenger and a competitor for the next 50 years.

What about sports content?

The stuff that we do in sports is really documentaries, like the Michael Jordan documentary that we did with ESPN. That’s the sweet spot for us, not the live broadcast. That’s great for broadcast television.

Is there a way to tell stories in the gaming space that would appeal to your subscribers?

In principal? Yes. But Hollywood companies have tried forever to be big in gaming and it hasn’t worked out. There’s enough differences between the art forms that, you know, it’s pretty challenging. We do have our interactive series like Bandersnatch, but I don’t think anyone would consider that gaming.

What have been watching during your extra time at home?

Our new show Away with Hilary Swank, Indian Matchmaking was just delicious, the Michael Jordan documentary The Last Dance, and The Old Guard, I just love the new types of characters and the setup on that.

This interview has been edited for length and clarity.