Netflix Inc. co-founder and CEO Reed Hastings doesn't think his streaming company is the reason that people are cutting pay TV services, despite press and analyst reports attributing the traditional video industry's weak subscriber net adds in recent years to competition from subscription video on demand offerings like Netflix and Hulu LLC.
"Very few people have cut the cord," Hastings said during CNBC's "Squawk Box" segment May 31. "We have seen maybe 2 million or 3 million of 50 cut the cord. We don't think of it as a big overlap that we are driving cord cutting. In general, it is like 2[%] to 3% per year, like broadcast ratings over the last 30 years. It will take a slow, secular decline, then they will adjust the economics," he said.
Calling Amazon.com Inc. a "scary" competitor because "everything Amazon does is just so amazing," Hastings said Netflix will continue to watch Amazon and "be impressed with them." The e-commerce platform is "helping to grow the industry because they are investing in the content," he said. Amazon Prime Video is ramping up its content game by investing more in original content and acquiring major sports rights such as the 10 NFL Thursday night games it just purchased.
Netflix is looking to spend $6 billion in content this year and that budget is expected to go up quite a bit in the future. "As we grow the membership base, we want to grow the current budget," Hastings said. "There are so many great shows we don't have yet. We are going to continue as we grow the membership base to try and get more shows and more movies."
Article amended at 8:35 a.m. ET, on June 2, 2017, to correct information on Netflix's content spending.