Netflix CFO Explains Plans to Ramp Up Original Programming

Speaking at Goldman Sachs’ Communacopia conference yesterday, Netflix CFO David Wells explained that the streaming service’s goal over the next few years is to offer more original programming. The company is aiming for half of its content to be represented by original productions and the other half licensed movies and TV shows. According to Wells, original programming will continue to be content produced by Netflix in addition to a range of co-productions and acquisitions. Netflix is “one-third to halfway” toward reaching its goal, he said.

“In 2016, Netflix expects to launch 600 hours of original programming, up from 450 hours in 2015, content chief Ted Sarandos said at the start of the year. The company has projected content spending on a profit/loss basis to rise from $5 billion this year to more than $6 billion in 2017,” reports Variety.

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Not every production needs to be major success. “We don’t necessarily have to have home runs,” said Wells. “We can also live with singles, doubles and triples especially commensurate with their cost.”

While Netflix reportedly paid $90 million for David Ayer’s “Bright,” featuring Will Smith and Joel Edgerton, the company is typically not spending big bucks on most projects.

Increasing its monthly subscription cost has led to recent account cancellations. “Wells noted that Netflix is raising prices to generate more revenue, which it will then invest in additional content to attract and retain subscribers,” Variety notes. “Of customers who cancel Netflix, between 33 percent and 50 percent eventually return to subscribe to the service, he said.”

Netflix is also striking deals with pay-TV providers such as Comcast and Liberty Global. Providers are learning that “it’s better to have the Netflix app on their box, their device, than lose customers to another ecosystem,” Wells said.