At its core, US media services provider Netflix is about quality entertainment and making its customers happy. In an exclusive interview, co-founder, chairman and CEO Reed Hastings talks about his appetite as a tech entrepreneur, what powers the company forward and how the team finds inspiration to tell the compelling stories for which the brand is known
(Sept 16): In late May, Netflix released a movie titled Always Be My Maybe, which is anchored in the oldest romantic film trope in the book — childhood friends, who had drifted apart, find each other as adults (who are now at different socio-economic levels) and somehow fall in love. And yet, defying conventional wisdom, Always Be My Maybe has received nothing but rave reviews and feels at once familiar, refreshing and quietly revolutionary. The movie is headlined by Randall Park of Fresh Off the Boat fame and the white-hot and hilarious Ali Wong. Together, they tell a time-tested tale of modern will-they-or-won’t-they that is somehow universal yet effortlessly Asian-American.
With Asian-American actors dominating its cast and a familiar plot, Netflix original film Always Be My Maybe was a gamble — but one that has paid off for the internet entertainment company, whose stock-in-trade remains anchored to the storytelling capabilities of its in-house content creators
In many ways, only a company like Netflix could have taken on the risk of such a film — corny, predictable and with a cast that is almost entirely represented by a minority. Always Be My Maybe shares a few important similarities with the rest of Netflix’s original content, which has traditionally been well received. These unique stories are told with a strong voice, and through incredibly good filmmaking.
After Life is another example of a gamble that few other entertainment companies could have pulled off. Written by and starring Ricky Gervais, it is about a suicidal newspaper reporter who attempts to find meaning to life after his wife dies. Just renewed for a second season, the British comedy-drama series is remarkably life-affirming, despite its premise, and establishes a clear identity for Netflix’s brand of honest, compelling storytelling. Content aside, the company’s original programming also combines an art-house feel and commercial appeal with consummate ease, a flair for the dramatic (Formula 1: Drive to Survive left me with no more fingernails to chew on) and an innate understanding of what people want to see on TV.
And yet, creating content was never the objective of Netflix when it first started out. Founder, CEO and chairman Reed Hastings did not want to tell his wife about the US$40 ($55.1) charge Blockbuster slapped him with for misplacing a VHS cassette of Apollo 13, which inspired him to rethink the whole in-home movie experience. In 1997, Hastings and Marc Randolph (who left the company in 2004) co-founded Netflix, offering a flat rate movie rental-by-mail service to customers in the US by combining two emerging technologies — DVDs, which were much easier to send by mail than VHS cassettes, and an online website to order them from, instead of a paper catalogue.
“I won’t say there was a gap that needed filling — I was just looking to make something better,” Hastings begins thoughtfully. “It doesn’t mean it was broken. It could still be quite good, but can you make it better? In 1998, 1999, the internet was very slow but we realised that we could mail DVDs via post, overnight, and it was very cheap. We could simulate an internet business by building a mail-order DVD business. It took us until 2007 to start streaming on the internet, and that’s when things got really interesting. Because once you can stream, you can also serve countries outside the US because you’re not dependent on the postal system. So, we got into more and more countries, and finally opened it up to the whole world in 2016.”
Disrupting Asia
Hastings generally does not like to use the term disrupter to describe the company he founded, but in Asia, that was exactly what it was. In 2016, Netflix “happened” in our part of the world, and the way we consumed our entertainment would never be the same again. Suddenly, access to world-class entertainment was at our fingertips and included programmes that we already loved (hello, Friends reruns) as well as new and exciting stuff.
It is no secret that many Netflix subscribers would be happy to spend their evenings in, binge-watching their favourite series, and cinemas might well have lost some of their market as a result of this. Local movies that we may have missed in the theatres, such as Jagat and Bunohan, have also made it to Netflix’s deck, giving the respective filmmakers a much wider exposure. Best of all is the convenience that it provides: There is no longer a need to lug a box set of DVDs around as you can watch pretty much anything you want wherever you want to — at home, on the move or even in a plane. At the risk of sounding a little dramatic — for us, Netflix has been life-changing.
But the version of Netflix we “met” in 2016 is relatively new. The successful business model we know of came from many years of guesswork on Hastings’ part — this was untested ground, after all. Whom do you take advice from when no one else is doing what you are doing? You rely on your instinct and judgement, and that is something Hastings does to this day.
In the years after Netflix’s launch — during which time its growth was so impressive that Blockbuster offered to buy it out — Hastings and his team had to make several quick-thinking decisions. For example, there were plans for a Netflix box in 2005, but all hardware plans were scrapped when YouTube showed the world that streaming could, in fact, work. Changing gears, Netflix finalised its streaming concept in 2007 and continued on its upward trajectory despite DVD sales falling substantially.
A pivotal year for Netflix was 2011, as Hastings and his team took on the risk of investing in their own content with House of Cards. It was the start of an entirely new direction for the company, and one that it is increasingly getting famous for. Although Hastings does not indicate as much, I imagine that original programming must have always been in the pipeline for the incredibly astute entrepreneur, who would have long known that simply being a repository for existing content was not going to ensure the company’s longevity.
In talking about content, it emerges that Hastings and I have much in common when it comes to what we like to watch on Netflix. As parents, Stranger Things is hard to stomach, but we are both fans of Ricky Gervais’ acting chops in After Life. Our interview was held in the weeks before the critically acclaimed Sir David Attenborough-narrated Our Planet was released, and, having previewed the entire series — part of the perks of being the boss, one would say — Hastings personally recommends it to me and my nature-loving six-year-old.
“Bird Box is kind of scary for me — I’m a chicken and I want to skip ahead, but most people loved it! They love to be scared. I’m clearly not a good gauge or representative of what people like,” he jokes. “But I try to watch a bit of everything. I’d say one of the best parts of being with Netflix is the pride you feel when there’s a show you love — as is the case with After Life, for example — and when you bump into people who love it too, you go back to that sense of warmth that it has.”
Using data to give recommendations
But the surprising secret to its content being so great? Hastings does not get involved in content development at all. “I am personally — and very thankfully — not sending notes to the creators to change the cast or anything,” Hastings laughs. “The power of Netflix is to give a voice to many creators. We have creators all over the world — Europe, Latin America and Asia — and we give them a global platform for their content and their stories. That’s really been the key to our success — allowing so many people to tell their stories.”
Formerly an IT guy before he ventured into entertainment, Hastings says data mining and the resulting algorithms have a huge part to play in the company. However, it is not used in the way people think — the system may recognise what shows you have repeatedly watched and make recommendations accordingly, but it does not know who you are or provide any input to the team when it comes to developing new content.
“When you’re a creator, when you sit down to do market research and try to talk to a targeted bunch of people, you’ll probably write a lousy story. But when you have to tell a story you really care about, that you’re passionate about… that’s when you get great art. People often think we use a lot of data… yes, but most of it is still human judgement. We sit around with a bunch of creators and we think about who to back and why. It’s a very human process because you’re dealing with creativity, with feelings.
“Clearly the data does have a role, of course. The recommendations that come to you on what to view? Yes, that part is very data intensive but that doesn’t help us with what to create. Once we have the content, then yes, the data is very helpful — we have a thousand new titles this year and you only have time for 20 or 50 of that, so we are trying to give you the best recommendations on what you might enjoy,” Hastings explains.
Although Netflix does not release subscriber numbers by region, much can be concluded from the source of the original programming — highly rated content now comes from outside the US and UK as well. Netflix has announced a line-up of at least nine original series in India, including Baahubali: Before The Beginning and Midnight’s Children. Based on a Filipino comic strip, Trese is set in Manila, Thai horror serial The Stranded launches this year, and following the recent zombie hit Kingdom, coming-of-age romance drama My First First Love was launched in South Korea. Not forgetting, of course, Malaysian author Yangsze Choo’s best-selling book The Ghost Bride, which will be adapted into a Mandarin serial.
Hastings is reluctant to go into too much detail with regards to the company’s future investments in Asia, but readily admits it is a market that is being closely watched. “We are continuing to grow in every country in Asia from India to Japan, of course Malaysia and Singapore as well. Each year, we learn more about what content pleases people. Bird Box was a huge hit, and so was Kingdom. I think will be a huge hit. One by one, we are trying to identify the kind of content people want to watch.”
Focused on being the best entertainment company
In Singapore, Netflix’s office occupies a huge space in the beautiful Marina One West Tower, its interior design subscribing to what is now acknowledged as a Silicon Valley standard — innovative ID concepts, localised design elements and a fully stocked cafeteria. It is a wonderful space, and I am especially thankful for the espresso machine after my early morning flight from KL to meet Hastings.
But what is not standard are the innovative management practices that Hastings has worked so hard to establish in Netflix. For example, the company is known to pay salaries that are much higher than the market rate to attract the best talent. It also allows employees to choose annually how much of their compensation they want in cash or stock, and has eliminated sick and vacation time for staff, allowing them to manage this time off individually.
“We do a lot of things differently, that’s for sure,” Hastings agrees. “For people who want to focus on entertainment, there’s no better place to work. We are really centred around being the best entertainment company, so if people care about providing good entertainment, they are going to like coming to Netflix. On our website, there is a list of 10 qualities we look for and judgement is key one for me. There are a lot of ambiguous situations, and if we had all the answers, we wouldn’t need thinking people. I don’t do interviews but I meet our new hires afterwards. There’s just an incredibly broad range of people from around the world working here, often those who have grown up in four or five different countries and got to travel broadly. It’s incredible, the global sensitivities that they all bring.”
Much of the worldliness that Hastings brings to Netflix comes from his own winding path to entertainment and technology. He graduated from Bowdoin College, Maine in 1983 with a degree in mathematics, then completed a stint in the Peace Corps in the landlocked African nation of Swaziland as a teacher. He earned a master’s degree in artificial intelligence from Stanford after returning and, to date, is an active advocate for education reform through charter schools.
“All this was pre-internet, mid 1980s, and to live in rural Africa teaching kids and travelling around… you come to realise that the world is so much bigger than the America that I grew up in. It helped a lot to develop my global understanding,” he muses. “It taught me that entertainment, in part, serves to educate people and broaden their exposure. When you watch a show from a place you’ve never been, you can’t help but build some empathy and understanding.”
Subsequently, he spent seven years as an entrepreneur in the software space before his lightbulb US$40 Blockbuster “incident”, which gave him many valuable insights into being his own boss and a business owner. At Netflix, he prides himself on giving his team as much authority as they need to make the decisions necessary for the company and, of course, “staying away from the content creation guys”. They must love you for that, I say, and he laughs, agreeing that they do.
“I have a more overall role these days, culturally glueing people together, staying on message, making sure the 5,000 people we’ve got are working towards the same goal. Which is, of course, to make the customers happy, and repeating that because we are growing very quickly,” says Hastings.
Moving forward, the focus will remain on building the brand and enhancing the value of what the company does. “We are really driven by entertaining people — we take that very seriously. Life is stressful, there’s a lot going on, and if we can make everyone laugh a little more, feel a little more and be connected a little more — that is a great outcome. You know, we’ve spent 20 years building our subscription service and it’s grown globally. We’ve expanded our original content and we will spend the next 20 years building it up, making it bigger and better. Apple is doing its own thing, Disney is doing a different thing, WarnerMedia is doing another — in terms of competitors, there are many companies and that’s okay. What we can do is just make our service a little bit better every week.”
In terms of future trends, Hastings believes that younger audiences tend to prefer shorter materials, so the emphasis will remain on episodic content, while continuing to cater for fans of full-length movies. If Always Be My Maybe is anything to go by, it is definitely an area worth spending a bit more time in, we would say — especially if it includes the possibility of working with filmmakers and storytellers from outside the US.
Netflix is now 22 years old and Hastings looks back on his journey with much contentment and an almost irrational eagerness to take on the challenges that are sure to come. “There’s been business mistakes or a show that didn’t work … we had a big fight with Blockbuster for years. There have been ups and downs, as you might expect, but overall, it’s been incredibly joyous and exciting to just be able to back more and more creators and to see the breadth of stories out there,” he says. Netflix has 148 million paid subscribers in over 190 countries and yet, Hastings has this to say: “If I had to sum things up, I’d say it’s been a good start.”
Anandhi Gopinath is an assistant editor of Options at The Edge Malaysia
With Asian-American actors dominating its cast and a familiar plot, Netflix original film Always Be My Maybe was a gamble — but one that has paid off for the internet entertainment company, whose stock-in-trade remains anchored to the storytelling capabilities of its in-house content creators
