The company believes it can extend film and television creators’ reach to a worldwide audience.
Netflix Execs Q&A:
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There’s no doubt that Netflix was among the biggest newsmakers at the Consumer Electronics Show in Las Vegas a few weeks ago. The streaming company made a big splash with an announcement that it was expanding to a further 130 countries, bringing its grand total to nearly 200.
Along with a few other journalists, I had the chance to sit down at CES for a chat with Neil Hunt, Netflix’s chief product officer, and vice-president of content acquisition Elizabeth Bradley, about what the expansion means for the future of Netflix and streaming video in general.
We talked about a broad range of topics, from how the company differentiates itself across its territories to the 4K and high-dynamic range (HDR) technology it’s pushing. Here’s an edited version of the first part of that conversation, with the second part following tomorrow.
Why aren’t you launching in China yet?
Hunt: China is a much more complicated market because we have to get licenses and permission from the Chinese government, we have to work with a local partner.
We chose to separate that from launching in 130 countries because that’s tricky enough. We do anticipate launching in China, hopefully soon, within the next few months.
How different would Netflix look there compared to countries that don’t have those restrictions?
Hunt: We hope to launch something that looks very similar, but we’re not at that point yet.
Is adding 130 countries going to increase your power in dealing with studios for global rights to content?
Bradley: We obviously have put a large emphasis on making Netflix original series where we are the commissioner globally, so we can offer the same package on the same day around the world.
When you license a show that the studios have already put into multiple windows around the world, it’s challenging to try and sync those up on the same day. But the studios are our partners in these shows… we’re making shows with all of them. So it doesn’t necessarily change [that relationship].
The studios are moving along with us in how they distribute. I don’t know if I’d phrase it that we’re stronger.
The element we’re really excited about is that if you think about Bollywood content, it mostly resonated in India. There really are no platforms in Sweden [for example] that offer it, and that’s something we can do. The anime market is big in Japan and we can help bolster that content around the world.
Hunt: That’s putting the power in the hands of the producers because they have a much wider audience to reach. There’s growth and development for everyone.
Do you have to get local content in each country to make it attractive for subscribers there?
Bradley: Great storytellers tend to resonate across markets so it wasn’t as if we went to Korea and licensed content only for Korea and nowhere else.
It’s pretty consistent in the type of offering we’re going after. There’s differences in what’s available, but we’re pretty conscious of having shows that resonate everywhere.
You can buy something like Breaking Bad and be sure that’s going to work in every territory.
Are you going to prioritize 4K over HDR, or vice versa?
Hunt: The strategy is to provide 4K with and without HDR and to provide HDR at a variety of different resolutions, starting well below 4K.
HDR requires about 20 per cent more bandwidth than the equivalent resolution of non-HDR. Somebody who has a six-megabit DSL connection, for example, is probably able to get 720p and maybe full HD [1080p] HDR, but they won’t get 4K with or without HDR.
Do you think customers care about HDR?
Hunt: We’ve had many increments in pixel resolution over the years and that’s great, but the marginal returns in moving up to 4K aren’t as great as the earlier steps. Equivalently, we have not had improvements in dynamic range or colour space at nearly the [same] pace and scope.
This is really the first step toward improving the picture in pixel depth and colour space. I think it’s going to be more important and more relevant to more people than moving to a higher resolution.
In the past you’ve said it could take five years for 4K to go mainstream. Is that still your timeframe or do you see it accelerating?
Hunt: I think I said last year that three to five years until more than half the devices sold will be 4K. I think I stand by that.
I think I also said three to five years until most content is produced with 4K in mind. I’d stand by that too, although it could be accelerating. It’s in that magnitude.
I think you can count on a similar three-to-five-year growth period for HDR devices.
Are you seeing big growth in the number of customers signing up to your 4K service?
Hunt: Yes we are, that’s a gratifying outcome. We have well over two million households that engage with Netflix with a 4K device and an increasing number of those who are buying the 4K package, although I won’t say what number. It’s definitely a growth area for us.
Can you clarify CEO Reed Hastings’ comments about the Adam Sandler movie, The Ridiculous 6, being Netflix’s most-viewed film?
Bradley: It’s been out for about 30 days, so relative to other titles in their first 30 days, it’s our top-performing feature.
We obviously made a big bet with making four pictures with Adam Sandler because we feel that he will resonate.
So do Netflix’s star ratings have any bearing on their popularity? That movie has one star.
Hunt: The star ratings are driven by our members based on how much they enjoy the content. The version that you see is based on people who have similar tastes to you and how they’d rate it. It’s not an average, it’s an average of people like you.
If it’s one star, then you and I are close together because we’re not Adam Sandler fans, which is fine.
The problem with stars is that people tend to use them to represent quality rather than enjoyment. Sandler is a classic case of something that can be perceived as low-brow, but can actually be quite fun to watch. How do you put stars on that?
We’re experimenting with a like/dislike signal and a per-cent match, so this is an 86-per-cent match for your tastes and interests. It may better capture the enjoyment factor.
How much are your decisions to license such content based on data versus the traditional way that networks acquire content?
Bradley: It’s way more weighted toward the first one, we don’t necessarily think of the way that traditional TV networks go about it.
We look at the data and that’s why we made the bet on Adam Sandler. Every film we’ve had in different countries continues to resonate. Critics don’t ever seem to like his films but that’s not what’s driving it.
How much better has your understanding of viewer data become since House of Cards?
Bradley: What our original series have been very conscious of is what can we license in the market based on what’s traditionally been available on linear networks and what are they not making?
Orange is the New Black is very different than what’s been on linear, Sense8 is something that would have had a hard time on linear, Grace and Frankie for people over 65.
We’ve been very conscious of trying to keep the diversity and that’s what we’ve learned from the data.
Check out part two of our interview with Netflix’s Neil Hunt and Elizabeth Bradley.