Interview with Reed Hastings at the Washington post where he gives Netflix's position on developing their content, ISPs, Open Connect and other subjects.
Some of the questions
(in bold) and his answers from the interview below.
Talk about your relationship with the telecom ISPs. What are pain points in that business relationship
Right now, it’s not really painful at all. The customer experience is great. You click and you watch. In the long term, there is potential conflict because we’re capitalist and they’re capitalist and everyone wants to expand their profit pool.
ESPN and HBO get a percentage of total cable cost. Cable costs 70 bucks and ESPN gets like 6 bucks of that.
So we look at it and say, “Hey, there’s a $60 ISP bill that is hugely profitable for ISPs. Maybe we should get a part of that because [consumers] are getting broadband to get Netflix.”
They say, “One-third of our bits, our costs, are Netflix, and so Netflix should pay part of our costs.”
There will be some battle around there. Our basic view is that there is a safe medium that avoids all the [television] carriage battles that we’ve had over 15 years.What are you doing to that safe medium?
We have Open Connect, how we connect to their networks. It’s servers that have all our discs. We bring the servers and connect them to their networks. We have to carry the bits to where they want, to each metro area, at our cost. The ISPs carry them. And we don’t charge them, and they don’t charge us.Are they happy?
Small ISPs are thrilled. But the big guys, they are used to better deals than that and they don’t want smaller guys to have the same deal.What do you need from Washington?
There is this ISP battle stuff. In an ideal case, we need nothing at all because it will all be worked out commercially. AT&T and Comcast in particular are very sophisticated with their regulatory mechanism. Yes, we compete with them on the video side. but we are also one of the main reasons people get broadband.What makes you think you are driving broadband adoption?
In peak traffic on a Friday, 30 percent of it is Netflix.But ISPs could say you gobble up so much bandwidth because your service is so bandwidth-intensive.
We don’t gobble anything. Their users choose to watch us. They sell a service to their members, and their members are using it.