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Netflix CEO Reed Hastings Talks Net Neutrality

The Internet video service now boasts 35.7 million domestic subscribers.

Asa Mathat

Liveblog Highlights:

  • Hastings continues to call out Comcast for “taxing” the Internet. “They want the whole Internet to pay them for when their subscribers use the Internet.”
  • Hastings wants to avoid government intervention, “but right now we don’t have anywhere close to that agreement” with Comcast and other providers to avoid that.
  • Netflix had no choice but to pay Comcast for faster content delivery “because the deal was better than the prior state,” Hastings claims. “We felt we had to.”
  • Netflix isn’t interested in acquiring sports rights. “Sports … we don’t have any bandwidth for, any money for,” Hastings says.
  • Hastings says Netflix does not, and will not, suggest changes to plot or characters based on viewership data and trends.
  • Hastings doesn’t believe Netflix needs to be acquired to compete long-term against the Amazons, Googles and Apples of the world.
  • Netflix should have grandfathered in customers for two years when it tried to raise prices and spin off its DVD business into Qwikster, Hastings says.
  • “A few people” are sharing Netflix viewing on Facebook, but “auto-sharing hasn’t yet panned out.”

Netflix has been on a roll.

The Internet video service now boasts 35.7 million domestic subscribers, widening its gap on rival premium TV channel HBO in the U.S. It announced plans to enter France, Germany and four other European countries later this year — its most aggressive expansion since 2011.

Netflix’s investment in original content also appears to be paying off. The second season of its political drama, “House of Cards,” is attracting “a huge audience that would make any cable or broadcast network happy,” Chief Executive Reed Hastings said in a recent note to investors.

A new season of its acclaimed prison comedy, “Orange Is the New Black,” returns June 6, and Netflix has other original series coming, including “Marco Polo,” a psychological thriller from the creators of “Damages,” and Marvel’s “Daredevil.”

At the same time, competition for viewers’ time continues to intensify. Cable, satellite and telecommunications companies are improving their TV Everywhere services, which give subscribers access to the TV programming they already pay for on portable devices. Meanwhile, online video services Hulu and Amazon are increasing their investment in original content.

The biggest concern for Hastings, though, is Comcast’s proposed acquisition of Time Warner Cable. The merger would give the combined company about one-third of the nation’s broadband subscribers, according to MoffettNathanson. Hastings has argued that such a concentration would give Comcast unprecedented control over high-speed Internet access — and the ability to drive up costs for services like Netflix that are trying to reach these subscribers in their homes.

In his appearance at the Code Conference, Hastings said the issue of net neutrality wouldn’t arise if cable companies had competition bringing high-speed Internet into the home. But that’s not the case: AT&T and Verizon invested tens of billions of dollars to compete with cable, and pulled the plug in 2010 — saying they couldn’t compete.

Although prices are not an issue now, Hastings said the concern is that cable operators will begin raising the prices services like Netflix, who are attempting to reach millions of subscribers in their homes.

“If you charge a little bit now, they’ll charge more and more and more,” Hastings said. “They want the whole Internet to pay them for when their subscribers.”

Hastings said he would like to avoid government regulation if all of the cable companies and Internet providers agree to net neutrality and have it built into its terms of service.

“We don’t have anything close to that level of agreement,” Hastings said.

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