Netflix has already debuted three original shows with several more in the offing
Netflix could back as many as 20 original shows in the future, CEO Reed Hastings told analysts on Monday. Though Hastings cautioned that this was dependent on the continued success of its upcoming original shows, he described the figure as “appropriately ambitious.”
“If the shows are wildly successful, we could continue to expand to 20 or north,” Hastings said after the company exceeded earnings expectations. “But that would be dependent on what happens the rest of this year.”
If Netflix does ramp up its original programming offerings, it would expedite the company's ongoing transformation from a rental service to a digital-only premium cable channel.
Netflix has launched three original shows thus far, two of which, “House of Cards” and “Hemlock Grove,” appeared in the past few months. Several more will debut before year's end, including the return of “Arrested Development” and “Orange is the New Black” from “Weeds” creator Jenji Kohan.
Though Netflix's first original show, "Lilyhammer," debuted last year with little fanfare, the company is ecstatic about the early returns from "House of Cards" and "Hemlock Grove." Hastings said the early viewing numbers for "Grove," which debuted on Friday, surpassed those of "House of Cards."
Though Netflix still spends almost all of its money licensing content from major film and television studios, every time Hastings speaks in public he spends the vast majority of his time discussing his original shows.
“Over this year with the continuing rollout of original shows, you see a very nice redefinition and broadening of what Netflix is to our members,” Hastings told analysts.
The redefinition Hastings refers to is the service's transformation from a DVD rental service to a streaming platform that offers videos that can only be found on Netflix.
In some cases, those are TV shows and movies for which Netflix acquired exclusive rights, as it did with future Disney new releases. In others, it's original content produced by others and distributed by Netflix, like “House of Cards.”
The combination of the two could qualify Netflix as the "most watched 'cable network'," according to a recent post by BTIG analyst Rich Greenfield. According to his data, Netflix subscribers spend more time per day streaming videos than cable viewers spend watching any cable network.
Netflix has a much smaller subscriber base than most cable networks, though Netflix surpassed HBO in terms of domestic subscribers based on its most recent earnings release.
Hastings projects that the company could reach two or three times as many customers as it does now.
That kind of growth will be essential if the company is going to keep making more money. Another option is raising prices, but Hastings dismissed that possibility.
“We started with streaming at $7.99 three years ago when we introduced the streaming plan and kept the same price the last three years,” Hastings said. “We've improved content significantly and kept the same price. […] I don't see any changes in the near term.”