Skip to main content

Netflix details new strategy: become HBO

netflix-ceo-reed-hastings-arms-in-the-air
Image used with permission by copyright holder

When you’ve just become the top movie subscription service in the world, you don’t raise rates without explanation. That comes off as greedy. And if you’re going to apologize for that mistake, try not to announce that you’re splitting your company in half and renaming half of it Qwikster. These actions will lead to 800,000 subscribers jumping ship and send your stock price tumbling from more than $300 a share to about $87 bucks in a couple months.

So what’s next for Netflix? Well, according to CEO Reed Hastings, it’s more problems. Just as we pointed out way back in February, Netflix is just now realizing that it has a problem: its business model is too limited. Without being willing to charge users extra or include ads in programming, it can’t own stream all movie and TV show content (like it does DVDs). The movie and TV studios are beginning to charge an arm and a leg for content. In a way, Netflix is at the mercy of these companies. If they decide not to sell it content, Amazon Instant Video, Hulu, or any other upstart service could easily take over the top spot. Amazon especially, has already built a fairly extensive library of films.

Hastings has a solution though: Less content, more exclusivity. His plan is to become like HBO and buy up exclusive streaming rights to really good TV shows and movies. Netflix will even produce its own content as well. The risk with this new strategy is that people really have to like the smaller amount of exclusive shows. The first TV show Netflix will produce is called House of Cards and is produced by Kevin Spacey.  

Here is a snippet from a letter Hastings sent out to shareholders (via AllThingsD): 

In television… the networks (ABC, FX, etc.) have long relied upon exclusive content to differentiate among themselves. As video moves online, so too has this practice of exclusive content. HBO has an exclusive license to recent Universal movies that includes its online HBO GO, for example. Netflix has signed exclusive licenses for DreamWorks Animation, for Relativity, and others. In episodic television, exclusives are also the norm. Netflix doesn’t license “Deadwood” from HBO because they see strategic value in keeping it exclusive. Netflix licenses “Mad Men” and “House of Cards” exclusively for much the same reason.

…We don’t have to “beat” Starz or other networks to succeed…We won’t have every movie or TV series; but we do provide enough value that consumers also want to subscribe to Netflix.

Any given consumer will have only one of DirecTV or Comcast, say, for their video service. That is classic either‐or competition. But with premium television networks like Netflix, the more good experiences there are, the more consumers are willing to spend to have multiple channels from which to get enjoyment.

 We have to say, it seems odd that Netflix is refusing to do what could be a very good option: add in streaming rentals for new movies and TV episodes. No, people don’t like paying extra, but they like getting what they want when they want it more. 

Editors' Recommendations

Jeffrey Van Camp
Former Digital Trends Contributor
As DT's Deputy Editor, Jeff helps oversee editorial operations at Digital Trends. Previously, he ran the site's…
The Ministry of Ungentlemanly Warfare’s cast on what makes Guy Ritchie so unique
The cast of The Ministry of Ungentlemanly Warfare sit and stand on a boat together.

Guy Ritchie loves to play the hits. Ritchie's films are often fast-paced, with evocative characters, sharp dialogue, and intertwined storylines. This kinetic style has been the backbone of Ritchie's 25-plus-year career. While the English auteur has a successful franchise (Sherlock Holmes) and billion-dollar grosser (Aladdin) on his résumé, the crime capers and action comedies — Lock, Stock and Two Smoking Barrels, Snatch, and The Gentlemen — are examples of Ritchie at his best.

As one of the leading voices in "dudes rock" cinema, Ritchie is back with another entertaining ensemble movie, The Ministry of Ungentlemanly Warfare. Inspired by true events, The Ministry of Ungentlemanly Warfare is an espionage action comedy about Winston Churchill's first special forces organization in World War II. Churchill's ragtag team of misfits, led by the dynamic Gus March-Phillipps (Henry Cavill), are brash, cocky, and violent. Yet, that's exactly the mindset Churchill needs for a team about to embark on a secret mission to defeat the Nazis.

Read more
Like Inglourious Basterds? Then watch these three WWII movies right now
Shot from Inglourious Basterds

Does anyone else really make movies like Quentin Tarantino? In addition to making some of the best movies of the past 30 years, Tarantino has also become well-known for his signature style, one that many have tried and failed to replicate. While not every Tarantino project is created equal, each of them is both deliriously violent and somehow also really funny, and it's that combination, along with his directorial flair, that has made him one of the most beloved modern directors.

Many consider Inglourious Basterds, his film about a Jewish-American battalion of Allied soldiers who hunt Nazis during World War II, to be among his best work. Like Guy Ritchie's new film The Ministry of Ungentlemanly Warfare, these three World War II movies have a similar tone and are also great in their own different ways.
Jojo Rabbit (2019)
JOJO RABBIT | Official Trailer [HD] | FOX Searchlight

Read more
Watch Haney vs Garcia live stream: PPV time, price, undercard
Devin Haney and Ryan Garcia on a promotional poster that says "This one counts."

"Tumultuous" might be the best word to describe the lead up to Devin Haney vs. Ryan Garcia. Garcia has taken his unhinged persona to the next level, and instead of debating CompuBox statistics and knockout percentages, everyone is talking about the whirlwind of a fight week. Garcia (24-1, 20 KOs) barked like a dog at his press conference. Haney (31-0, 15 KOs) slapped Garcia on top of the Empire State Building. The crazy fight week build up culminated with Garcia missing weight by over three pounds, meaning he is no longer eligible to win Haney's WBC World Super Lightweight belt.

But the show must go on, and the two will meet in the squared circle on tonight, April 20. Devin Haney vs Ryan Garcia is about to start, at 8:00 p.m. ET, and will stream on DAZN PPV. There are four fights on the card before that, so the main bout is estimated to start around 11:00 p.m. ET. Keep reading for everything you need to know to watch boxing online this weekend.
Watch Haney vs Garcia live stream on DAZN PPV

Read more