Netflix CEO takes a cue from Canada success and targets 10% UK household penetration

Yesterday, BSkyB’s Jeremy Darroch announced Now TV, offering pay-as-you-go Internet TV to the masses. Today, Netflix CEO Reed Hastings took to the same stage at the Guardian Changing Media Summit in London, and announced that Netflix was already there. Well, with its own version at least. “Sky recently launched TV Now, well…we already have ‘Now’,” he said.

Of course, Sky already has all the major movie studios signed up, so Netflix still has some way to go before it can claim to offer anything close to what Sky will have in store when it launches Now TV in the near future. Looking forward though, Hastings has a pretty clear benchmark in mind for success, and it seems he’s taking a cue from Canada.

A cue from Canada

Hastings reminded the audience that the US’s larger neighbour recently hit 10% penetration across all households, which is a pretty impressive figure, considering we’re only 18 months on from launch. But they had somewhat of a head start there, given that Canadians receive much of the same media exposure as Americans. “In Canada, we had a brand following so we were already well known before we launched, this is something we don’t really have in the UK,” he said. “But it’s also something we’re trying to build.”

Of course, in Canada it also secured the rights to Fox Movies, and then Paramount. If it’s to seriously challenge Sky in the online video-on-demand (VoD) space, it will need to bump up its content offering.

In terms of its UK progress so far, Hastings remained tight-lipped, though he did give some indication. “We’ve launched in 45 countries in addition to the UK, and in the UK we’ve had the biggest absolute over-performance that we’ve ever seen,” he said. “Relative to what we had expected. We have exceeded all of the benchmarks.”

Okay, this doesn’t say too much. – they may have had low expectations. But Hastings gave the impression that they may not even need to directly compete with Sky, given the low cost of Netflix. “It’s £5.99 a month. It’s so cheap, we think folk will get Netflix anyway,” he said.

Just to recap, Netflix was founded in the US in 1997, starting initially as a DVD-rental delivery service before finally morphing into more of a VoD streaming service. Today, it serves the US and Canada, Latin America, the Caribbean, and, as of January this year, the UK and Ireland, where it finally arrived to exchange blows with LoveFilm.

10%: The big UK milestone

But looking forward to the next couple of years, Hastings was clear about what his goal was. “The first big milestone will be how long will it take us to get to 10% of all households,” he said. “There’s not many services that get to 10% of households in any country, that’s a big number. It’ll take a couple of years, it won’t be overnight, but that’ll be a big milestone for us.”

More immediately, he said that Netflix could reach one million homes, which is at least some clue as to where it’s currently at.

So, Netflix started life as a technology company, but it’s also branching out into original content. When asked what it now is, a technology or a media company, he responded. “We want to be better at technology than any media company, and better at media than any technology company.” A good response for sure. But it still has a long way to go.

You can view all our coverage from The Guardian Changing Media Summit here.