Netflix CEO Reed Hastings Calls Company an Entertainment Company

According to the chief executive of Netflix, the streaming giant is neither a media company nor a technology company but should be classified as an entertainment company.

The company’s valuation is far higher than traditional entertainment companies and according to Hastings, traditional media companies can effectively compete with Netflix if they’re willing to fully commit to streaming video.

In an interview with CNBC, Hastings said Netflix was best defined as “an entertainment company.”
“Media tends to involve advertising,” Hastings said on “A View from the Top.”

“Tech, I mean, we’re tech-powered, but we’re not really like Microsoft, that’s in multiple areas of tech, or Google. We’re a single application, a single service. It’s all about entertainment. We have more employees in Hollywood than we do in Silicon Valley. Two-thirds of our spending is on content. So we’re really an entertainment company.”

Hastings believes that it is possible for traditional media companies to compete with Netflix — if they’re willing to focus completely on streaming.

“All it takes is focus and commitment,” said Hastings. “Let’s look at Warner. They did not put ‘Tenet’ on the HBO Max service, but Disney did put ‘Mulan’ on it. So you’d say Disney’s incrementally more committed to their service than Warner. So it’s a matter of degree. I’m sure they have good reasons in those cases. We’ll see.”

According to the CEO, traditional media companies will continue to consolidate in an effort to compete with Netflix.

“I think you’ll also see continued combinations of the existing players, just like you saw with Fox and Disney coming together,” Hastings said. “Typically you bulk up to take on the other guys.”

Disclaimer: We have no position in Netflix Inc. (NASDAQ: NFLX) and have not been compensated for this article.