Netflix CEO Says Improving Data Options Will Fuel Its Global Expansion

Plus why it avoids vertical video

50% of U.S. households have a Netflix account.
Getty Images

BARCELONA—In a keynote interview with BBC Radio’s Francine Stocks at Mobile World Congress, Netflix CEO and co-founder Reed Hastings said that despite challenges around mobile data plans, the company’s international growth is off to a strong start.

The majority of the discussion centered around Netflix’s international push. A little over a year ago, Netflix went live in 130 countries, except China, which has significant internet restrictions on streaming video.

“We’ve seen great mobile usage throughout Africa, the Middle East, Asia—that’s been one of the big stories is how much more people live on mobile,” Hastings told a full room. “We’ve always had the ambition to just do some of the best content the world has ever seen but then to make it available simultaneously so there is never any delays. It’s incredible for us, very satisfying.”

In terms of growing competition in global video from the likes of YouTube, Amazon and local networks, Hastings said, “They’re not trying to kill us—they’re trying to serve consumers.”

The surge in digital video makes sense because he thinks people will only watch video on the internet in 10 to 20 years.

At the same time, Netflix is in negotiations with many global carriers and operators that are represented here at Mobile World Congress to help bring quality video to the internet. Such negotiations can be tricky though, with carriers and operators concerned about how revenue and legal issues will be handled in individual countries.

“Some of you are old enough to remember dial-up internet—now that seems like such a relic,” Hastings said. “Well that’s what we want to make buffering.”

Another major international issue is data caps that limit the amount of video and media a consumer can interact with each month. When pressed by Stock about data limits, Hastings brushed it off as another example of how quickly the internet has evolved.

“In the early days of the internet, there’s things that we all don’t love and that’s things like data caps. What we’re going to see is I think a number of companies pioneering new ways to offer services to the consumers where it’s unlimited video data but it’s limited to say one gigabyte speed. So, it’s a lower speed but you get unlimited data—that turns out to be very efficient on the networks so an operator can offer unlimited viewing.”

Netflix has also invested in video coders that improve picture quality with a low gigabyte. “Now we’re down in some cases to 300 kilobytes and we’re hoping someday to get to 200 kilobytes.”

Hastings also talked about the format of mobile TV. Unsurprisingly, Hastings suggested that people like to watch full-length episodes and movies from their smartphones, even as some film producers and execs likely still prefer to have their content watched on big, beautiful screens.

“I watch The Crown on mobile and it’s incredible—you see these great panoramas but when I told the writer Peter Morgan that he was aghast—there are some people who are very classic in what they want.”

To that point, Hastings believes that younger consumers will grow up watching full-length video on smartphones, so the company does not embrace vertical video or design any content specifically for a mobile screen.

“We focus on incredible story and characters that engage and storylines that are memorable or funny,” he said. “We don’t design for mobile. There are people who are talking about that—like vertical video—and maybe we’ll look at that some day, but really what we’re focused on is stories that you want to watch on any screen.”

So will all those young users just cut the cord so that they only have a Netflix subscription, as many have speculated? Maybe.

According to Hastings, 50 percent of U.S. households have a Netflix subscription but the total number of cable households—or MVPD households—has steadily hoovered around 100 million users for the past few years.

“Netflix is one more source of entertainment like HBO,” Hastings said. “The idea of Netflix as one additional channel with a great experience is taking hold.”