Netflix CEO Dishes on Blowout Quarter
CNBC Media and Entertainment Reporter
Netflix's better than expected earnings was due to the explosion of Internet-connected TVs, tablets, and smartphones, which enabled more viewing and convinced more people to sign up, according to Reed Hastings, CEO of Netflix.
"Really, what's happening is Internet TV, this 'click and watch,' the control you have, being able to watch on an [Apple] iPad — all of those things are just very powerful. And more and more people are doing that," Hastings told CNBC. (Read More: Netflix Delivers Surprise Profit, Outlook; Shares Jump)
Hastings noted that Netflix can afford to compete with cable channels like Time Warner's HBO and Starz, for content, without having to raise prices. "We've got more subscribers, say, than Starz ever had. And that allows us to afford to make big investments."
For Netflix, this year will be defined for its first real foray into original content — 'House of Cards,' which costs an estimated $100 million for two seasons, launches on February 1st.
"For some people it'll be the tipping function that gets them to join. For other people, it sets a base, and then when they hear about some other show, then they're finally going to join Netflix," Hastings explained. "So it helps us both with members and non-members."
The company hasn't built in upside from original content into its estimates, Hastings pointed out, but its big upcoming shows could potentially have a huge positive impact. "There's no good way to estimate that, but we feel very good about how it's improving our relationships."
Hastings said it's worth taking big risks on new shows, though he learned the hard way that not all risky moves pay off.
Eighteen months ago Hastings announced plans to split off its DVD business into a new company called Qwikster — hiking prices, sparking huge customer uproar, and sending the stock plummeting.
"We learned a lot, that yes, you can be too slow, but you can also be too fast. And we just were too aggressive about going towards streaming ... and we stepped back, we cancelled the Qwikster," Hastings said. (Read More: Netflix Blunder Could Cost It 30% of Subscribers: Study)
"We're a swing from the fences company, we want to do great things. And you know, occasionally, if you swing from the fences, you're going to strike out. And Qwikster was that strike out. But we're still swinging from the fences. House of Cards — it's an incredible, big production. You just have to move forward," added Hastings.
And moving forward he is, with activist investor Carl Icahn looking over his shoulder. (Read More: Icahn To CNBC: 'I'm Buying Netflix Because It's Undervalued')
"[Icahn] came in at about $58, ninety days ago, so he's done very well by his investment, and he's a very savvy investor," Hastings said with a chuckle. "We've had several constructive discussions about how to grow a bigger business for Netflix and how to make it a stronger business."
Hastings also weighed in on the controversial issue of whether he violated the SEC "Regulation Fair Disclosure" by posting the number of hours Netflix streamed to his public Facebook feed last summer.
"Reg FD is about protecting the small investor, and what they don't want to do is give special information, say, to Carl Icahn or to someone else. Going wide with Facebook ... is very much in the interest of the little investor. So we feel good about it, and I think the regulatory process will work out those things," Hastings concluded.
—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin