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Netflix CEO Reed Hastings has explained the simple reason his company will continue to grow.
In short: Netflix is a better product, and a better experience, than traditional TV.
His explanation came during Netflix’s earnings call Wednesday afternoon after an analyst questioned Netflix’s ability to continue growing.
Netflix came up short of expectations with its third-quarter earnings report. It added 880,000 US subscribers, down from the 980,000 it added in the same period a year ago. It was also light in comparison to analyst expectations of 1.2 million subscribers.
Hastings, however, didn’t seem fazed. He said he thought Netflix would still be able to add 5 million to 6 million new US-based subscribers annually.
Why? Hastings explained:
It’s fundamentally that internet TV is better than linear TV. The consumers can watch when they want, on what type of device they want, and the content has just got better and better.
So the fundamental confidence about the large scale is because on-demand is a better experience than linear, and the entire market is going to move from linear to on-demand internet television over the next 10 to 20 years.
Hastings is right. Linear TV – or what you see when you turn on your cable box, a bunch of channels playing all at once – is a quirk of an old system. We’ve just gotten used to it.
It is not a better experience for users. There’s nothing convenient about organizing your schedule around the random programming decisions of TV networks to be able to watch TV. Netflix’s on-demand viewing lets people watch what they want when they want it.