Netflix CEO: "We Made Mistakes" With Cannes Controversy

"We got into a more difficult situation with the Cannes Film Festival than we meant to," Reed Hastings said.

Reed Hastings signaled a strategy shift on Thursday following the conflict surrounding the Cannes Film Festival. In a keynote speech at Series Mania in France, the Netflix CEO referenced the festival that begins May 8.

"At times we have a reputation as a disruptor, and sometimes we make mistakes," Hastings said about the ongoing controversy preventing Netflix films from being shown at the festival. "I think we got into a more difficult situation with the Cannes Film Festival than we meant to because, you know, we're not trying to disrupt the movie system; we are trying to make our members happy. We make our content for them."

Last year, Netflix brought Bong Joon-ho's Okja and Noah Baumbach's The Meyerowitz Stories (New and Selected) to the Croisette. The films were selected in official competition, outraging French exhibitors. Netflix refused to show the films in French theaters — even day-and-date or limited release was ruled out — due to the country's strict chronology law that requires a 36-month waiting period before films can stream.

Following the outcry, festival artistic director Thierry Fremaux was forced to change the rules, and this year Netflix was nixed from the competition lineup. Netflix in turn refused to allow its films to unspool in the Palais without a shot at a Palme d'Or.

Hastings indicated the company will no longer try to compete or screen in the prestigious festival. "What we'll do now is mostly focus on series and standup, docuseries and great content we can do without disrupting or being perceived to disrupt the movie sector," he said.

Still he indicated that discussions with Fremaux and the festival are ongoing.

"We love the film festival, and we still have buyers going. The festival is very sincere in trying to find a model that works for them and works for us," he added. "I'm sure over time we'll definitely [go back]."

"That’s the main issue for us. We are trying to treat our movies as series and release them directly to our members and not trying to compete with the theatrical system," he added.

Still, he refused to advocate for changing French chronology laws, which are currently being debated, saying only: "I think it's up to the French people to figure out how they want to organize the cinema industry. It's been pretty successful [so far]."

He also downplayed rumors that he is trying to buy Luc Besson's EuropaCorp, saying that, "We do love Luc, but I can't say any more."

Hastings joked about several rumors, saying: "The thing that everybody wants to do is sell something to Netflix now. We're the deep pockets."

Discussing the future of series in Europe, Hastings said that the company plans to spend $1.2 billion in 2019 on local European content creation and expects that figure to increase in 2020. 

In the fourth quarter of 2017, the streamer's two biggest global hits were European, with Spain's La Casa de Papel and the U.K.'s The End of the F***ing World topping their international list.

With the EU set to require streamers to create 30 percent of their European streamed content on the continent, Hastings said the new requirement is "tough for us." The company is currently at about 20 percent and will hit that 30 percent target in about three years. 

He also said that the company pays a fair amount of taxes — another big European issue for the U.S company — through the 20 percent VAT tax it charges subscribers. "What we have to do as we become part of the pay TV industry is we have to figure out how to work within the system," he said. "It's our responsibility to try to figure out all the different systems in different countries and be a constructive partner."