“Oh, great – now you’re gonna make me go get this…” Hastings said, as I revealed most of the results.
The subject of our interview was supposed to be Hastings’ new tome, No Rules Rules, which aims to deconstruct Netflix’s idiosyncratic corporate culture. It is a place where annual leave is unlimited and where employees can be subjected to a controversial “gatekeeper test” at any time, which has been criticized as a sort of Hunger Games-type employee appraisal system. survival of the fittest, but what Hastings says is no such thing.
(The title of the book, by the way, might sound a little unfathomable, but the idea is that having no rules absolutely rules! Understand that?)
But now he was distracted; he had found the results. “I just watched the Emmy record,” he noted aloud, ignoring an unrelated question from me. “Oh my God… wow… Set a new record, oh my God! Thank you for this little good news. ”
And that was it. ” Go forward. Let’s talk about the book.
So much for small conversations. Then again, an aversion to gossip is likely to be expected from the boss of a $ 230 billion (£ 175 billion) entertainment colossus who has enjoyed an improbably disproportionate share of success. Since its inception, Netflix has surpassed a well-entrenched legacy player (Blockbuster), correctly anticipated the consumer shift from DVD to streaming, woke up ahead of most of its rivals by the importance of original content, and established itself. like a Hollywood studio. It rakes armfuls of statuettes at each year’s awards show – but has also proven ideally placed to take advantage of a pandemic, with the world’s population being forced to spend more time at home than ever before. Netflix had gathered 193 million subscribers worldwide this summer, of which nearly 26 million were added between January and June. This was more than double the gain of subscribers over the same period in 2019.
This was the year in which the battlefield of the so-called streaming war in the United States got tougher than ever, thanks to new players like Quibi, Disney +, Peacock, and HBO Max. Aside from similar streaming products from brands like Amazon and Apple, the fight for consumers’ eyeballs has never been so fought. Yet the Netflix frenzy is now part of the collective experience associated with the hearth controls and lockdowns that made 2020 the year we can’t wait to forget.
But despite the success, the desire to improve and innovate never stops. Hastings reigns over the Company’s subscription-based empire as a Philosopher King, ruminating over the future in an endless quest to imagine and anticipate threats that might arise.
“The phrase I use internally is, ‘We suck,’ Hastings says proudly. “We’re pretty good. But we suck compared to where we’ll be in three years.
It is an attitude of perpetual dissatisfaction and constant movement. Hastings tells me his job today is to inspire the company to try new things, challenge old assumptions, and figure out when and where the streaming giant should make its next big leap forward: “Think about it. me as a peacetime rather than a war CEO. “
As a result, Netflix no longer sees creating its own TV shows and movies as a side bet – it’s the game. As former Amazon Studios executive Matthew Ball put it, Netflix has been ” quite open to the fact that they take it out all the time people spend watching videos (and as much free time without video as they can get, including ‘enjoying a glass of wine with [your] partner’) “. In communications with shareholders, Netflix stressed that it views the game differently from almost all of its rivals. It’s not just Netflix vs. HBO; it’s also Netflix against “reading a book, surfing YouTube, playing video games, socializing on Facebook [and] go out to dinner with friends ”.
That’s why, for example, the gossip is that Netflix is looking for a talent show series that could rival something like American Idol. It’s also taking a deeper push into the reality genre, thanks to new series this year such as Too Hot to Handle, Love Is Blind, Floor Is Lava, and an American version of the UK show The Circle. Not exactly the kind of content that seemed on the horizon at the start of Netflix’s push into premium original programming like Orange Is the New Black.
Hastings uses this year’s release of Tiger King to illustrate how the company chooses the sequel. This particular documentary series has exploded in popularity and has become a cultural touchstone of the coronavirus pandemic. Everyone talked or knew Joe Exotic, to the point that a White House melee reporter asked President Trump if he was considering forgiving the exotic animal showman (who is serving a 22-year sentence for his role in a 2017 murder for pay) for his various misdeeds.
“Think of it like: every member of the content team has a budget authority, so someone believed in Tiger King,” Hastings says. “And then they can build a track record. So we can essentially bet in parallel. It’s not like we’re investing a billion dollars in it and it’s a chance for the future of the company.
“Think of Elon Musk and SpaceX. They have a chance, don’t they? And so everyone, including Elon – he’s like the chief engineer. He personally examines, I don’t know, the thruster. And that is what is needed if you have a big thing. But, with Netflix, we have the business model where there are a lot of different titles and a lot of different product features. So we can allow many people to make these decisions.
No Rules Rules also makes it clear how different Netflix is from the companies most of us work for. Nowhere is this idea more prominent than in the form of the keeper test. Hastings explains, “If someone quit smoking, would you work hard to keep them, to change their minds, and to stay? Yes [a manager] said yes, I definitely would, so it’s like: great, and we move on. Okay?
“It’s not like The Hunger Games at all… The Hunger Games’ false impression comes from the idea that there has to be a fixed number – I mean, in The Hunger Games it comes down to one, right? Everyone gets killed. In our case, there is no fixed number. If everyone passes, everyone is happy… It’s not like a once-a-year exam. It’s just a [process]; that’s what people think about. ”
Of course, not everyone passes – and if you fail the test, you are released with “generous severance pay”. Hastings has said before that there should be no shame in Netflix not being the right company for you.
For those who survive, the most pressing thing on their minds is what the future might hold for them. This is why the company is using its sizable cash reserve to outbid local channels in countries such as the UK, to take advantage of the fact that few new televisions are currently being made. The broadcaster buys shows that traditional broadcasters would normally have been able to buy, making it more difficult for those broadcasters to plug holes in their programs destroyed by Covid.
John McVay, head of the Pact business group, which represents the UK’s independent TV production companies, says media such as Netflix are making the situation even more difficult for local channels. “I know a lot of people who work for streamers in acquisitions and they buy everything,” he said. “Unless we can bring new and fresh content into UK programs that is engaging and resonates with our experience of the world we live in, then I fear for our broadcasters.”
The pandemic has also affected Netflix, with productions being suspended or stopped. Last month, he canceled young adult drama The Society after initially lighting a second season green, attributing the reversal to Covid-related headaches such as uncertainty around the production schedule and the availability of actors. .
“Our productions, where we actually shoot, have been very affected,” says Hastings. “Because there is no virtual substitute. We just finished a Ryan Murphy movie two nights ago. We are doing well in Europe. But think of it as productions, being on set, actors close to each other – it’s very impacted. Our office work, by comparison, is the same flow, they are the same meetings, they are just online rather than in person. ”
Nonetheless, Netflix’s dominance seems almost insurmountable. A recent Piper Sandler survey asked 1,000 U.S. consumers, “What video services will you use once the stay-at-home rules are easier?” Netflix was the clear winner, with 41% of respondents naming it, compared to 28% for Amazon Prime Video, 20% for Hulu, 17% for Disney + and 7% for HBO Max. A separate survey of 600 Piper Sandler consumers found that 52% of Netflix subscribers are so happy with the service that they would pay more each month.
So does Hastings feel confident, or does he subscribe to late Intel CEO Andy Grove’s maxim that “only the paranoid survive”?
“Paranoiacs are delusional and they can’t tell reality from fantasy,” Hastings retorts. “If you are paranoid, you will fight all kinds of false threats. Maybe astronauts will come along and change the entertainment. So, let’s start working on the anti-astronaut program. The real problem in business is like chess – you have to figure out which avenues you are going to explore and where the game might go, and if you don’t explore one that you should have, you can be defeated. And your ability as a human to prune the tree of possibilities is the essence of being a great chess player.
“Business isn’t just about being paranoid in the face of all threats. You need to determine which threats are important and focus on them… Of course, individual threats will come. Maybe it’s augmented reality. Maybe it’s a new kind of drug and you’re taking it and it’s way better than TV? And it’s safe, efficient and personalized. There will be possible replacements [for Netflix]. But, deep down, we’re trying to put in the right culture so that we can adapt to it. ”
No Rules Rules by Reed Hastings and Erin Meyer is published by Virgin Books on September 8