Netflix CEO Dismisses "Clumsy" Cannes Theater Policy Change

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Netflix CEO Reed Hastings

Reed Hastings said that the controversy over whether Netflix films will be allowed in future Cannes competitions is increasing the profile of 'Okja' and 'The Meyerowitz Stories.'

Netflix's fight with the organizers of the Cannes Film Festival over whether its films, which do not screen widely in theaters, should be included in the official competition is only helping the streaming video juggernaut, CEO Reed Hastings said Wednesday. 

"We don't want to fight with anybody," he said during an onstage interview at the Code Conference at Rancho Palos Verdes' Terranea Resort in a reference to the French theater owners that pressured Cannes organizers to add a rule that films must have distribution in French theaters to be eligible for the festival's official selection. But in Hastings' view, the attention conferred upon Bong Joon-ho's Okja and Noah Baumbach's The Meyerowitz Stories is good for those projects. "It's been fantastic for us," he added. "They'll get a lot more awareness." 

This was the first year that Netflix had films in the festival competition. The uproar came after Cannes released its lineup in April. Although festival organizers attempted to reach an agreement with Netflix to show the films in French theaters, a deal did not materialize. The new rule, which will go into effect next year, was introduced just days before the prestigious film fest kicked off in the south of France. After the change was announced, Hastings wrote on Facebook that the move represented "the establishment closing ranks against us." Both films went on to screen at Cannes to enthusiastic receptions. 

"Sometimes the establishment is clumsy when it goes after the insurgent," said the exec. 

At the end of the first quarter of this year, Netflix had 98.75 million subscribers. The company surpassed 100 million subscribers on April 24, and Hastings celebrated with a steak dinner at Denny's — a reference to a tradition started when Netflix reached its first 1 million members. 

The company, which started as a DVD-by-mail business, has transformed significantly over the years on its path to offering original and licensed programming around the world. But movies are still a relatively new business for Netflix, which started its original programming push with television series. Hastings noted that attracting audiences through films can be harder since there's not the same opportunity to hook them with a serialized show and then encourage them to binge-watch, a viewing model that Netflix popularized. "There's no movie equivalent," he acknowledged. 

While Netflix may have launched the streaming video trend, the company has seen increased competition from tech giants including Amazon and, now, Apple. But Hastings noted that each company has a different strategy. "Amazon's strategy is super broad," he said, calling the e-commerce giant the Walmart to Netflix's Starbucks. "We can't try to be that. We can be the emotional connection brand." 

In addition to producing films and television shows, Amazon is also pushing into live sports through a streaming deal with the NFL. But while many observers are excited by the prospect of sports on Netflix, the streamer has no plans to jump into that business, Hastings reiterated. "Sports is really good in the moment, but the afterlife of a given show is quite small," he said. "It's hard to transform sports with the internet. You can carry it over the internet, but what does it do for you?" 

Even Facebook is now buying up shortform and television-quality programming. Hastings is on the board of the social network, but according to him there's no conflict of interest. He explained: "We're not bidding on the same shows."