Netflix CEO Thinks They Should Be Canceling More TV Shows

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Photo: Netflix

If Netflix founder and CEO Reed Hastings gets his way, the streaming giant may soon become a bit more ruthless when it comes to canceling shows. While Netflix has heretofore been known for almost always renewing series for at least two seasons — the recent axing of The Get Down was the outlier — Hastings told CNBC on Wednesday that he thinks the service has had too many successful series of late. “Our hit ratio is way too high right now,” Hastings said. “So, we’ve canceled very few shows … I’m always pushing the content team: We have to take more risk; you have to try more crazy things. Because we should have a higher cancel rate overall.” It’s not that Hastings wants Netflix to purposely make shows that are unsuccessful, though. His logic: By taking big swings, “you get some winners that are just unbelievable winners, like 13 Reasons Why. It surprised us. It’s a great show, but we didn’t realize just how it would catch on.”

Not surprisingly, Hastings refused to get specific about just how many people have watched 13 Reasons: The network famously doesn’t release detailed viewership data. CNBC anchor Julia Boorstin nonetheless pushed Hastings to back up his claim of having too many hits, noting that it’s hard for those who cover the service to figure out what’s working and what’s not. And in a bit of a surprise, Hastings offered a hint about how Netflix now determines success or failure. “You can tell when we cancel a show,” he said, essentially admitting that how many people watch a Netflix series is part of the formula the streamer uses to determine renewals. While Netflix has previously suggested that keeping and increasing subscriber counts were its most important metrics, Hastings on Wednesday seemed to say eyeballs mattered. “It’s a mix [of viewing and subscriber growth],” he said. “Mostly, it is how many people watch. But those are very connected.”

During the CNBC interview, Hastings also:

— Said Netflix will keep increasing its total spending on content, beyond the $6 billion it’ll invest this year. With Amazon, Hulu, and others stepping up their programming efforts, Hastings said Netflix would increase its spending “a lot. As we grow the membership base, we want to grow the content budget. There are so many great shows we don’t have yet.”

— Refused to directly answer a question about whether Netflix might have to hike its prices anytime soon. When asked whether a hike was likely, Hastings demurred: “What we have done is kept our base price $7.99. It has been eight years. He have moved the HD and the upper tiers. But the base tier has stayed the same price for eight years.”

— Admitted Amazon’s push into TV is “scary,” even if not a major threat to Netflix. “They’re awfully scary, I would say,” Hastings said. “I don’t know if they are the biggest [threat], but they are awfully scary … Everything Amazon does is just so amazing. It’s like they are trying to repeal the basic laws of business … So we are continuing to watch them.” That said, Amazon is “helping to grow the industry because they are investing in the content.” Hastings said what Netflix won’t try to do is to move into multiple businesses the way Amazon has. “If we try to out-Amazon Amazon, then that’s a losing battle. So what we have to do is be the specialty play. We are trying to be Starbucks, and they are trying to be Walmart.”

Netflix CEO Thinks They Should Be Canceling More TV Shows