Hasting’s stance on Netflix’s corporate type is in stark contrast to Facebook CEO Mark Zuckerberg.
According to CEO Reed Hastings, Netflix is prioritizing spending more money as a media company, not a technology company.
“We will spend over $ 10 billion on content and marketing and $ 1 to $ 3 billion on technology,” Hastins said during a meeting with analysts.
“So objectively we are more like a media company in terms of spending money. Of course, we want to be a great company in both areas. But again, they are.” I’m quite different from “tech companies.”
That’s an interesting confession for a company valued at nearly $ 140 billion after its Q1 earnings report was released.
At this value, Netflix is only $ 10 billion less than Disney’s capitalization even though its business is much smaller. In the last quarter of 2017, Netflix made $ 186 million out of $ 3.29 billion in revenue, while Disney’s profits reached $ 4.4 billion out of $ 15.35 billion in total revenue.
The rather high market capitalization suggests that investors are looking at Netflix’s growth potential and seeing it more like a tech company than a typical media company.
Hasting’s view of his company is in stark contrast to Facebook CEO Mark Zuckerberg.
During a congressional hearing on April 11, the leader was asked if Facebook is a media company. But Zuckerberg says that Facebook is a technology company because its primary function is to build products and services for people.
Netflix on the other hand, they do not have to worry about regulations and laws because they do not serve ads.
“I’m glad we’ve built a business that’s not dependent on ads but on subscriber count. We’re very different from businesses that run ads and we protect everyone. We don’t sell ads, so I think Netflix is immune to all the problems that are going on in the tech industry.
In the first quarter, Netflix profits reached $ 3.7 billion, exceeding the figure of 3.69 billion previously expected. However, they show higher user growth, adding 7.541 million new subscribers.
Phuong Linh / CNBC
* Source: Young intellectuals