Netflix CEO Reed Hastings Says the Movie Industry Is Broken

October 7, 2016, 2:40 PM UTC
Latest Consumer Technology Products On Display At CES 2016
Netflix CEO Reed Hastings delivers a keynote address at CES 2016 at The Venetian Las Vegas on January 6, 2016 in Las Vegas, Nevada. CES, the world's largest annual consumer technology trade show, runs through January 9 and is expected to feature 3,600 exhibitors showing off their latest products and services to more than 150,000 attendees.
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The TV business is doing swell in the eyes of Netflix CEO Reed Hastings, who points to a bonanza of good shows and innovative distribution models. But movies? Not so much—and Hastings is willing to point fingers as who’s to blame.

“Movie theaters are strangling the movie business. There’s been no innovation in the movie business in the last 50 years,” Hastings told New Yorker editor David Remnick at the magazine’s TechFest event on Friday.

Hastings slammed what he described as an “oligopoly” among the theater chains, telling Remnick that studios would like to experiment with distributing movies directly to consumers, but that they fear reprisals from the cinema owners.

The criticism is part of Netflix’s larger campaign against “windowing” in which the movie industry staggers the release of films across different platforms. (Needless to say, the cinemas are fine with the current arrangement because releasing films all at once would likely undermine their profits).

Netflix (NFLX) earlier this week company announced a deal with luxury chain iPic to distribute 10 of its original movies on the same day they appear on the streaming service—a move that ruffled the feathers of traditional Hollywood types.

More broadly, Netflix is facing choppy waters as it seeks to maintain growth and justify its high share value at a time when the likes of Amazon (AMZN) and cable networks are leading to a glut of online TV shows. Hastings, however, rejected Remnick’s suggestion of a “TV bubble,” saying ongoing improvements in distribution will make the current volume of TV sustainable.

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Hastings did not directly address rumors of a potential takeover by Disney (DIS) or Apple (AAPL), which have led to Netflix shares to head higher in the last week. He did, though, mention those two companies, citing their struggles to expand in the Chinese market.

The CEO also cited other elements of Netflix’s strategy during the interview, including the company’s intention to stay away from the live sports market. As for the future of technology, Hastings said he believes virtual reality is unlikely to expand beyond gaming in the next five years, and that he thinks the bigger boon to TV and movies will come as a result of ongoing improvements to device screens.

After falling short on earnings in the second quarter, Netflix is set to announce its next round of financial results on October 17.

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