Don’t call Netflix (NFLX) a tech company.
That was one of the takeaways from Netflix’s first-quarter 2018 “earnings interview” — a pre-recorded video equivalent of the traditional company earnings call — in which CEO Reed Hastings fielded a broader question about whether he thinks Netflix will be affected by government concerns around data privacy. The issue emerged this March following reports that Cambridge Analytica had harvested the data of up to 87 million Facebook (FB) users.
During hearings over the course of two days last week, Facebook chief executive Mark Zuckerberg defended the company he started in 2004, which continues to derive the vast majority of its revenues from advertising in Facebook on desktop and mobile devices.
“I’m very glad we built a business not to be ad-supported but to be based on subscription,” Hastings said in an indirect reference to Facebook’s core business. During the first three months of the year, Netflix added 7.4 million new customers, topping analysts’ estimates of 6.5 million. “We’re very different from the ad-supported business, and we’ve always been very big on protecting all of our members’ viewing. We don’t sell advertising. So, I think we’re substantially inoculated from the other issues that are happening in the industry — and that’s great.”
Hastings further distanced Netflix from the data privacy concerns surrounding tech companies at the moment by suggesting his company is more of a media company — more in the same vein as say, The Walt Disney Co. (DIS) or CBS Corp. (CBS) — than a pure tech company.
“I’d point out that we’ll spend over $10 billion on content and marketing and $1.3 billion [this year] on tech,” added Hastings. “Just objectively, we’re much more of a media company in that way than pure tech. Now, of course, we want to be great at both, but again, we’re really pretty different from the pure tech companies. ”
Hastings’ attempt to distance Netflix from ongoing data privacy concerns in tech follows on the heels of remarks last month made by Apple CEO Tim Cook, who has been surprisingly outspoken on the topic.
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