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Netflix Has No Plans to Show Live Sports

CEO Reed Hastings acknowledged lack of sports is big factor preventing streaming service from matching cable in subscribers

Netflix just had its biggest quarterly subscriber growth ever behind the strength of series like “The Crown” and the continued adoption of internet TV, but the streaming giant has no plans to wade into one of traditional pay TV’s few remaining moats — live sports.

On a Wednesday afternoon webcast discussing the company’s fourth-quarter earnings, CEO Reed Hastings responded to an analyst’s question about how Netflix has been able to achieve growth and what it would take to match the estimated 100 million households that pay for cable — about 50 million more than subscribe to Netflix — by mentioning one way Netflix would not try to close that gap.

“I think it’s really just this diffusion through society, as more and more people use Netflix we have better shows and more of them,” he said. “[But] in terms of getting to a true 1:1 tie ratio with cable, that includes a lot of sports, which we don’t have plans for.”

Netflix has, however, continued to run up the score with its subscriber base, particularly internationally, adding 7.1 million new members last quarter, with 5.1 million of those outside the U.S. Fully 47 percent of Netflix subscribers are now located in international markets.

“The basic demand creation is increasing as people get more comfortable with internet television, where you don’t get the commercial interruption and you can watch when and where you want,” Hastings said.

But despite coming off its best quarter ever, Hastings and CFO David Wells warned against putting too much emphasis in any single three-month period, saying that can show “lumpy” growth which looks a lot smoother when analyzed on an annual basis.

“The big picture is remarkably steady,” Hastings said.

Hastings and Chief Content Officer Ted Sarandos also shared insights into what Netflix programming is working particularly well internationally.

“You see shows like ‘Luke Cage’ and ‘Narcos’ that travel extremely well around the world,” Sarandos said, also mentioning “Gilmore Girls,” which surprised in its foreign appeal and “particularly performed great in Europe.”

Netflix local language content, offered in 10 countries, also served as somewhat of a differentiator from existing options, Hastings said.

“We find it creates a lot of great excitement for Netflix in the market because it’s a really elevated form of television compared to what else is in the market,” he said.

Wells added that with many of Netflix’ original series going into their second, third and fourth seasons, they’ve had enough time to build a fan base and have their initial buzz trickle down to people who aren’t yet on Netflix — which could motivate them to sign up. He said shows into their second seasons and beyond tend to draw more subscribers than new originals, even successful ones such as “The OA.”

Hastings said no single title tends to compel people to join the service, but a cumulative effect of hearing about different shows ultimately gives a lot of people enough fear of missing out that they pull the trigger for $7.99 a month.

“There’s a tipping point,” he said. “And that triggers you to sign up for Netflix.”