Netflix Chief Reed Hastings says that piracy actually helps users get used to watching movies and TV shows via the Internet, and makes them more accepting of paid legal services such as Netflix.
Speaking ahead of the planned launch of Netflix in Spain, a country that has a very high piracy rate, Hastings dismissed suggestions that Netflix will be facing an uphill battle against the "piracy problem" in the country.
"Well, you can call it a problem, but the truth is that [piracy] has also created a public that is now used to viewing content on the Internet," says Hastings.
"In Holland we had a similar situation. That too was a country with a high rate of piracy. And the same thing happened in Canada. In both countries we are a successful service ... I think Spain will be one of our most successful countries."
With Netflix unable to compete with piracy on price (mainly because pirated downloads are free), Hastings say there are things that Netflix does much better than piracy.
"We offer a simpler and more immediate alternative to finding a torrent," says Hastings, before using an analogy to explain just why he thinks Netflix can compete with piracy. "We can think of this as the bottled water business. Tap water can be drunk and is free, but there is still a public that demands bottled water."
Hastings also explains why when Netflix comes to a new country, the number of titles available in its library is usually only a small subset of established regions like the US.
"In each country we have to start with a smaller catalog and begin to expand gradually as the number of registered users grows. In the UK, for example, we now have a fairly extensive catalog of TV series and movies after three years of activity there," said Hastings.
"Our offering is expansive in Latin America too, but it is much easier to negotiate and acquire rights when you buy for a large subscriber base as we now have in the United States."
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