Netflix CEO: We fear 'getting long in the tooth'

@CNNMoneyTech June 1, 2011: 2:34 PM ET
Netflix CEO Reed Hastings has one big fear: That his company will eventually

Netflix CEO Reed Hastings shared his "one big fear" at the D9 conference.

NEW YORK (CNNMoney) -- Netflix CEO Reed Hastings has one big fear: That his company will eventually "get slow and stodgy."

Hastings' admission came in response to a question from All Things D columnist Kara Swisher, who moderated a discussion with Hastings on Wednesday at the D9 tech conference in Rancho Palos Verdes, Calif.

"What worries you the most when you wake up every day?" Swisher asked.

"You hear about companies getting long in the tooth," Hastings said. "All of these innovations are going on every day, all around you. One day, someone could overtake you."

On the surface, Netflix doesn't appear to have any major competitors to its mix of video streaming and DVD rental. Swisher asked Hastings whether he felt threatened by Amazon (AMZN, Fortune 500), Google (GOOG, Fortune 500) or Apple (AAPL, Fortune 500).

"Our major competitor is going to be cable and satellite companies switching to a TV everywhere model," Hastings said. "Eventually they will be bundling that kind of video into a package."

Swisher expressed doubt, noting that big cable companies "have been pretty slow" to integrate online streaming video.

"They're still a formidable competitor -- it's a huge industry," Hastings replied.

He reiterated his past comments about Netflix's lack of current season TV or newer movies, saying that "all that new stuff is expensive, so you can't have that at just $8 a month." At a conference last month, Hastings said going after that type of content would spark "World War III with cable."

Still, Hastings said Netflix (NFLX) would like to work out a deal with HBO and Showtime to get "earlier season content."

Swisher asked why that wasn't possible. Hastings shot back: "Check's not big enough yet."

International expansion: Netflix launched in Canada late last year -- though it's been somewhat stymied by the country's severe bandwidth caps -- and it has plans for two more new markets.

"We tell investors that the better we do internationally, the more money we'll lose, because we'll invest more," Hastings said. "In Canada we think we'll be profitable within a year of launch. China is tough for us, but Korea, India, Japan ... those would be great."

Netflix would have existing competitors in some of those markets, Hastings said. He used that opportunity to point out that Netflix "is finally beating BitTorrent," but he didn't go into specifics.

Social component coming: During a Q&A session, an audience member at D9 asked Hastings why Netflix lacks a social component.

"There should be," Hastings replied. "We launched Netflix Friends in 2005 to try to build our own private social network. But in two or three years we learned, as many companies did, that people don't want vendor-by-vendor networks."

Instead, Hastings said, customers prefer to use Facebook for socializing across the Internet. Netflix is working on a Facebook integration, he said.

Beyond the Internet: Hastings discussed the limitations of video on mobile devices' small screens, and he said laptops still make up the largest share of Netflix use. But he said the company is "agnostic" about devices.

"It's more an Internet service on every device," he said. "We want customers to be able to access it whenever they want it."

And devices aren't all that will evolve, Hastings said. The very fabric of the Internet is changing, and it may become obsolete itself.

"Something will eventually replace the Internet," he said. "But is that in 10 years, 100, or 500? It's incredibly hard to imagine. It's like asking our ancestors on horses to imagine a car." To top of page

CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.