Netflix CEO Speaks Out About Amazon

06/06/2017 05:36 pm EDT

Netflix CEO Reed Hastings wants to differentiate the streaming service company from Amazon and he has a new favorite analogy to illustrate his point: "Amazon is Walmart, and Netflix is Starbucks."

In the last two weeks, Hastings has used the analogy multiple times in describing Netflix's competitive advantage. While Amazon's style is to offer a "breadth" of options, Netflix offers "specialty" content.

"You know, if we try to out-Amazon Amazon, then that's a losing battle," Hastings told CNBC. "So what we have to do is be the specialty play. We are trying to be Starbucks and they are trying to be Walmart. So, we have to have brand intense love and focus."

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"We're not trying to meet all needs," Hastings said. "Amazon's business strategy is super broad … What we can be is the emotional connection brand … super-focused on one thing that people are very passionate about."

While Netflix has a slew of original shows that have become wildly popular such as Stranger Things, House of Cards, and Orange Is The New Black; there is one other distinct advantage that Amazon has over Netflix that has some investors nervous. Amazon doesn't have to rely on the revenue from of its premium video in order for the company to be successful.

At the Code Conference last June, Amazon CEO Jeff Bezos laid out the company's unique advantage when it comes to streaming video.

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"We get to monetize [our subscription video] in a very unusual way," Bezos said. "When we win a Golden Globe, it helps us sell more shoes. And it does that in a very direct way. Because if you look at Prime members, they buy more on Amazon than non-Prime members, and one of the reasons they do that is once they pay their annual fee, they're looking around to see, 'How can I get more value out of the program?' And so they look across more categories — they shop more. A lot of their behaviors change in ways that are very attractive to us as a business. And the customers utilize more of our services."

Bezos also said: "Because we have this unusual way to monetize the premium content, we can charge less for the premium content than we would otherwise have to charge if we didn't have the flywheel spinning to help sell more shoes."

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