Media Money with Julia Boorstin

Netflix's Reed Hastings takes a new approach

Netflix CEO Reed Hastings
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Netflix shares soared to new all-time highs as the company reported better-than-expected results and guidance. But the big surprise is how CEO Reed Hastings approached the call, the stock and the company's future.

(Read more: Netflix shares soar as outlook blows past forecasts)

Hastings talked down the stock: In both the "letter to shareholders" and on the earnings call he raised concerns about the stock's massive gains—when a stock is high CEOs usually say they'll let the market determine the value of the stock; when it's low, they say they believe it's worth more.

On the Q&A with investors Hastings took an entirely different approach.

"Every time I read a story about Netflix is the highest appreciating stock in the it worries me because that was the exact headline that we used to see in 2003 ... we have a sense of momentum [that] investors [are] driving the stock price more than we might normally. There is not a lot we can do about it but I wanted to honestly reflect upon that."

Similarly, he took a very surprising approach to HBO. Hastings back in May called HBO Netflix's "biggest competitor" and also called himself "their biggest fan."

There's no question that Netflix competes with HBO for viewers, content and even Emmy awards, and Hastings has made it clear that he doesn't want to replace HBO, but rather wants to compete on the same plane. But instead of promoting Netflix's content and interface as a real, formidable competitor to HBO, he highlighted just how far Netflix has to go before his company could possibly catch up to the behemoth.

Netflix reports Q3 earnings
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Netflix reports Q3 earnings

On the heels of analyst reports praising Netflix for surpassing HBO's roughly 30 million domestic subscribers, Hastings chose to end his letter to shareholders by writing: "We have done well but we have a long way to go to match HBO's 114 million global member count or their well-deserved Emmy award leadership. Title by title, device by device, member by member, award by award, country by country, we are making progress."

Then on the earnings call Hastings said it would take more than five years to catch up to HBO.

"As we grow, HBO is really focusing on doing incredible work. They will probably do some of the best shows they ever do in the next five years. They are expanding more aggressively in international. So I think that we will see is they grow some. We hopefully grow a lot and I don't know when we will catch them. It is going to be a long time."

Then there's Hastings approach to his clear "frenemies" the cable companies—Netflix is outside their system, but wants to get inside it. And there are growing concerns that Netflix (and other services) is driving a generation of "cord nevers" who never pay a monthly cable bill.

In the letter to shareholders he stressed how Virgin Media's integration of Netflix into its cable boxes is "great for customers, and we want this superior experience to help Virgin Media gain market share in the UK." Translation: Work with us and we will help your business, not tear it down.

(Read more: Icahn sale would hit Netflix stock: RBC's Mahaney)

On the investor call Hastings went into more detail on the potential for Netflix to be integrated with U.S. cable providers, giving Comcast a plug. "We have to figure out deal terms that make sense for both sides," Hastings said. "But I have an X1, the Comcast box at home. It's got apps and I listen to Pandora on it. Personally, I would like to be able to watch Netflix and that would keep me on the Comcast X1, which is a great product."

Hastings has consistently disrupted the status quo since he founded Netflix in 1997, first with an unprecedented DVD-by-mail business, then by successfully transitioning that business into an unlimited streaming business. When in July 2011 he split the two businesses up and effectively doubled prices, handling the price hike poorly and sparking massive outrage, the media and investors said he'd never be able to win back consumers trust.

But he did, and over the past year the company went from 20 million to 30 million streaming video subscribers. And he did so with an unconventional approach, posting a mea culpa on Google's YouTube, shot with him wearing a turquoise linen shirt, sitting outside at Netflix's beautiful Northern California campus. That drew more backlash, but the company still turned around.

And then there was Hastings' Facebook posting about Netflix's streaming numbers, which prompted an SEC investigation into financial disclosure policies, prompting a significant regulatory change—now companies can disclose material information on social media.

(Read more: Soaring Netflix viewership rivals big TV networks)

There's no question that Hastings has created a whole new category—a streaming video service that behaves like a cable channel, without the limitations of being part of a cable bundle, or the legacy infrastructure. It has worked well enough that Amazon and even Redbox, owned by Outerwall, have tried to get into the game.

What will Hastings unconventional leadership yield next? The third-quarter stats are striking: Earnings quadrupled to 52 cents per share, beating expectations, revenue rose 22 percent from a year ago, in line with expectations, to $1.1 billion. The company added a stronger-than expected 1.29 million U.S. streaming subscribers and a surprisingly strong 1.44 million new international customers. The outlook is also rosy—with Q4 earnings projected to come in at a range above Wall Street's consensus, and another 2 million U.S. streaming subscribers expected.

While Hastings tried to dampen stock expectations, he also laid out a plan to stick with what works—doubling investment in original content, more international expansion. He said he would stay away from NFL rights or any other content like sports, which works better on linear TV. That said, considering Hastings track record, it seems everything—movies, cable deals—is being considered as he continues to disrupt the entertainment business.

Disclosure: Comcast owns CNBC parent NBC Universal.

—By CNBC's Julia Boorstin. Follow her on Twitter: @JBoorstin.