Netflix CEO Reed Hastings plans to subscribe to rival Disney's service — despite getting snubbed

Key Points
  • Disney is pulling its shows off Netflix and is launching competing over-the-top streaming service.
  • But Netflix CEO Reed Hastings says he plans to subscribe.
  • "Our view would be to let them try to innovate on those aspects, and watch what they do, and learn from consumers," Hastings says.
Reed Hastings, co-founder and CEO of Netflix.
Michael Newberg | CNBC

Netflix CEO Reed Hastings is playing it cool about competition from Disney's upcoming over-the-top video service.

Hastings said he plans to subscribe to Disney's service, which would not only compete with Netflix but could include a lot of content that Disney says it will pull from Netflix.

"I think in particular Disney, with its strength of brand and unique content, will have some real success. I know I'll be a subscriber of it for my own personal watching. The same way as many Disney and Fox executives also subscribe to Netflix," Hastings said on a conference call with Wall Street analysts.

Disney agreed to buy Twenty-First Century Fox assets late last year, a deal that would give the combined company a significant stake in another Netflix rival, Hulu. But Hastings pointed out that Netflix is different in key ways, including the lack of advertising.

"Everyone knows the costs of competition, but the benefits are that your competitors are challenger brands, so they don't tend to follow your strategy," Hastings said. "We get to learn from that. Our view would be to let them try to innovate on those aspects and watch what they do and learn from consumers. Do they really love it? It doesn't change our strategy."

Investors are betting that Hastings is right: Shares rose more than 10 percent on Tuesday, a day after the company reported better-than-expected subscriber growth in its Q4 2017 earnings report.

"Our thing is working, and what we have to do is not get distracted," Hastings said. "Total streaming will grow faster because of the competition."

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