Netflix CEO: We’re Not Causing Cord-Cutting
One of Netflix’s earliest strategic advantages was its $30 million deal with Starz, the Liberty Media-owned cable network, to license its content for use on the Web, which it struck in 2008, essentially the pre-historic age of Internet video. Now the deal is up for renewal in the first quarter of 2012, and the speculation is that it may cost the company $200 million or more. Asked to comment on that possibility by Kara Swisher at the All Things D conference, CEO Reed Hastings answered: “It wouldn’t be shocking.”
He also added some color to the perceived trend of “cord-cutting,” where consumers forsake cable or satellite TV subscriptions in favor of Internet-based video entertainment. He said the small decline in conventional TV subscriptions seen in 2009 had more to do with the recession and the uptick in residential foreclosures. Netflix, he says, is complementary to cable and satellite subscriptions.
Here are some highlights of the conversation.