Netflix’s Reed Hastings Says Streamer’s Biggest Threat Is YouTube’s AI Content Becoming ‘Cool and Sexy’ to Young Users | Video

Netflix co-founder Reed Hastings may have taken a back seat since handing off the CEO reins to Greg Peters and Ted Sarandos in 2023, but he still sits on the board as chairman and holds a unique stake in the entertainment giant’s success.

Asked what he sees as the single biggest risk facing subscription entertainment, Hastings said in an interview published Wednesday that he’s worried about AI-generated content on free platforms like YouTube becoming “cool and sexy enough” to younger users to make paying for a service like Netflix feel unnecessary.

“Subscription entertainment, I’m very confident of,” Hastings said in a preview clip from “In Depth With Graham Bensinger.” (The full episode is due to air in broadcast syndication across the U.S. this weekend.)

“People are going to want entertainment. So we have a couple risks, mostly around AI,” Hastings continued. “Does AI transform content creation in ways such that young people only watch YouTube, and YouTube content boosted with AI becomes cool and sexy enough that that takes all their time?”

Host Graham Bensinger asked the tech executive if that’s a threat his “gut” is telling him anything about.

“Well, that’s the risk,” Hastings said. “And so we have to use AI well enough to improve our content, along with all the talent that we work with so that we’re worth paying for.”

He then said that AI is a tool that Netflix is employing to “improve the storytelling” and make the service worth paying for.

“So YouTube’s free, and we’re a subscription, and so we have to justify — which has been the history of television, starting with HBO, why pay for television? That was the initial thing,” he said. “And HBO proved that they could do content good enough that it was worth paying for. And so the challenge for us is to use AI to improve the storytelling.”

But it’s not just YouTube Hastings is keeping an eye on. The streamer is also monitoring pay-subscription competitors like Paramount, he said.

“And then we have direct competitive risks, us against Paramount, us against other companies that we have to continue to just tell the best stories on the planet,” he said. “If you’re tuning into Netflix five days one month, but the next month we earn seven of your days, and the next month nine, then we’re off to the races.

“It’s around earning those moments where you choose Netflix instead of the competition.”

Watch the full segment from Hasting’s “In Depth With Graham Bensinger” in the video interview below:

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