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Smallwood: You're right that it's hard to exactly place our industry—even
internally we joke about it. If you're down in our Beverly Hills office, you feel
like you're working for an entertainment company. But if you're up here in our
Los Gatos headquarters, you feel like you're working for an Internet technol-
ogy company. We really are both.
I would say that the key problems people are trying to tackle are what do con-
sumers want to watch and how do they want to watch? How people watch is
a big problem now that there are so many more choices of things to watch.
There's so much flexibility in what Netflix—and now others—are starting
to offer that it's really important that we figure out how to set things up in
a way that's best for consumers. For instance, there have been various public
articles about Netflix and how people want to watch Internet entertainment.
These articles have focused on binge viewing, whether that is a good thing, and
whether people like that or not.
Anecdotally, I've had a few people tell me that they cancel Netflix for a couple
of months at a time because they feel they're spending their weekends on the
couch. So they exercise self-discipline and cancel Netflix for a few months,
intending to come back later. You can see this is a tough area, because offering
more choices and flexibility in how and when to watch leads some people to
cancel their accounts for a few months.
The other problem is determining what people want to watch. We've
observed in broadcast television the whole transition to reality TV. And, just
like everything else on the Internet, content from all over the world is becom-
ing more accessible, and so now you have more choices and flexibility around
what you can watch. With all of these new types of things people can watch,
it becomes harder for us to be able to provide what they really want down
the road. At an industry and company level, we have to figure out where we
should be focusing to be able to provide what's best for our customers and
their watching choices.
Broadcast TV and other players are also thinking about these same kinds of
things. Everyone is really focusing in on what kind of content should be devel-
oped. For instance, people consume much more serialized programming than
they do movies. Does that mean that they're happier with serialized television
than movies? Or do they prefer a mixture? So there are all sorts of nebulous
things like that that we really want to understand.
Gutierrez: Who's driving the thought process behind understanding what
people want to watch?
 
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