Laying out plans for world domination has never typically been associated with the hero of any given story, until now. Netflix execs want their service to be in just as many houses as broadband, but don’t want to be lumped in with the likes of Google, Amazon and Facebook.
In terms of growth, Netflix has bigger ambitions than ever, despite all the new competition in the streaming market. As part of Netflix’s Q4 2019 earnings call this week, CFO Spencer Neumann said: “Even with the roughly 167m members across the globe you can see we’re still roughly at 30% penetration. We think, as pay TV households you’ve seen around the world, whether it’s TV or broadband households, we don’t see why we can’t get into all of those households over time.”
So, with all the ambitions of a super villain, what makes Netflix comparably the “good guy”?
“We don’t collect anything,” said Netflix CEO Reed Hastings. “We’re really just focused on making our members happy and we’re not tied up with all that controversy around advertising”.
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He continued: “If you wanted to succeed in online advertising you can’t just have a little data. You know, to keep up with those giants you’ve got to spend very heavily on that and track locations and all kinds of other things that we’re not interested in doing. We want to be the safe respite where you can explore, you can get stimulated, have fun, enjoy, relax and have none of the controversy around exploiting users with advertising.”
Of course Netflix does, at the very least, collect and analyse your viewing habits, and uses that data to recommend even more of its content.
The conversation around Google, Amazon and Facebook − and data privacy generally − surfaced when Hastings was asked about why Netflix doesn’t offer users an option to pay less but also see advertising.
Hastings explained: “Google and Facebook and Amazon are tremendously powerful at online advertising because they’re integrating so much data from so many sources, and there’s a business cost to that. But it makes the advertising more target effective and so I think those three are going to get most of the online advertising business.
“Then, to grow a five or ten billion advertising business you have to rip that away from other providers, which is quite challenging. In the long term there’s not easy money there.”
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He added: “Instead, we think if we don’t have exposure to that, the positive side is that we’re a much simpler place, we’re not integrating everybody’s data, we’re not controversial that way. We’ve got a much simpler business model which is just focused on streaming and customer pleasure.
“So, we think with our model that we’ll actually get to a larger revenue, larger profits, a larger market cap, because we don’t have the exposure to something that we’re disadvantaged at, with online advertising against those big three, which over the next 10 years are just going to integrate incredible amounts of data about everybody that we won’t, and we’re not trying to, have access to. So that’s why we’re pretty confident that the best business model is this way, especially in the long term.”