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After winning Wall Street and Hollywood, Netflix wants to be the next YouTube

"Stranger Things" is one of five Netflix series with big Emmy nominations.

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Last week, Netflix picked up 91 nominations for the 2017 Emmy Awards — almost double the number it received last year. This week, it surprised Wall Street with a strong second-quarter performance.

Netflix stock prices soared after announcing it added 5.2 million new subscribers in the second quarter — much higher than the expected 3.2 million. It has also crossed 100 million subscribers worldwide, with slightly more than half coming from international markets.

The results come after a series of big risks by the streaming giant. It has reportedly spent $6 billion on content just this year, and it cancelled several high-profile and expensive shows such as "Sense8" and "The Get-Down."

And now Netflix has a bigger prize in mind — to become the next YouTube.

On an earnings call yesterday, Netflix CEO Reed Hastings said that while Netflix viewership is growing, it still has a long way to go to match YouTube's one billion hours of viewing a day.

Variety's New York Digital Editor, Todd Hastings, has been covering this story and spoke with The Frame to discuss Netflix:

Interview highlights:

On the biggest takeaways of the earnings report:

They exceeded the number of subscribers that they signed up by a very wide margin. That gave investors a lot of optimism that the company's fast growth trajectory is not yet over, it's not reaching the top of the bell curve just yet.

On Netflix as a customer and competitor of movie studios and TV networks:

They've been watching Netflix with a measure of concern and envy for a while already. In fact, Netflix is a huge customer for a lot of studios and networks. Most of the spending that Netflix does on content is to acquire past TV shows and films, so Netflix is in a sense a competitor but it's also very good for the studios as well.

On Netflix's international strategy:

They are trying to think of what's going to play well with audiences around the world. Now, at the same time, you have different tastes in different parts of the world, so Netflix is going to have to increasingly spend money on local, regional content that's in-language, that is culturally resonant in those areas, because what's popular in India is not necessarily what's going to be popular in the U.S. or South America or parts of Asia.

On why Netflix wants to be the next YouTube:

Netflix has wrestled with this idea of who is their competitor. They've most often been compared to HBO for a long time, and in fact Netflix itself has said, We want to become HBO faster than HBO can become us. That's been the comparison so far.

I think what [CEO Reed] Hastings is trying to do is set the bar higher and really reveal what his aspirations are — to be the largest source of video entertainment in the world. I think it's mostly kind of a vision-setting thing here, not that Netflix is competitive with YouTube, really, in any way. YouTube is largely ad-supported and Netflix has no ads at all. But I think he's thinking of it in terms of the vision of what Netflix is trying to be — the biggest internet video company ever.

To hear John Horn's full conversation with Todd Spangler, click on the player above.


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