Reed Hastings Tells the TV Guys How to Beat Him

The TV guys are having second thoughts about Netflix, which used to seem like a good place to sell leftovers but now seems like a competitor that’s eating their lunch.

So what can they do about it? Reed Hastings has some advice: They should take all of the programming they provide to cable TV subscribers and let them watch it whenever and wherever they want, over the Internet. Just like Netflix does.

But Hastings also knows that the TV guys have been trying to do this for years — and failing. They call the strategy “TV Everywhere,” and it hasn’t worked for a bunch of reasons. But if it did! That would be bad for Netflix, Hastings says. He just doesn’t think it would happen.

Hastings laid out his prescription (along with the reason the TV guys can’t put it to work) at the New York Times’ DealBook conference today in response to a question from BTIG analyst Rich Greenfield, who asked what Time Warner CEO Jeff Bewkes and 21st Century Fox Chairman Rupert Murdoch should do to fend off Hastings.

Here’s the relevant part of the interview:

“I would invest more in TV Everywhere. Jeff Bewkes pioneered that idea, seven, maybe eight years ago, and has been trying to drive it. The challenge in the industry is that it’s very fragmented between the cable networks and the distributors, and so it’s really tough to work well together, to extend the ecosystem.

“We’ve always been most scared of TV Everywhere as the fundamental threat. That is, you get all of this incredible content that the ecosystem presents, now on demand, for your same $80 a month. And yet the inability of that ecosystem to execute on that, for a variety of reasons, has been troubling.

“Now, some of the independents — HBO, Showtime — have done a much better job. Their business model is much more straightforward, because it’s subscription. So they’re leading the pack in terms of now getting out there and marketing to subscribe directly as a consumer.

“That little niche has a protected system. But the big system has to figure out TV Everywhere to get relevant for the Internet.”

You can see the question and answer for yourself in this clip, starting at the 27-minute mark:

https://www.youtube.com/watch?v=i-4Auh7vgDU

As Hastings notes, he doesn’t really think the TV guys can get it together on this. But this is in fact what some of the TV guys say they’re going to do, for real this time — in part by finally creating decent apps, and in part by pulling back some of their programming from Netflix and other digital subscription services.

You may hear them talk about it in the next few days, as the big entertainment companies deliver their Q3 earnings reports and talk to investors.

This article originally appeared on Recode.net.

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