Netflix has proven capable at adjusting its business model and tactics. It wasn’t so long ago that the company replaced AOL as America’s largest distributor of optical discs. Similarly, 2013 introduced the world to Frank Underwood, the lovable anti-hero of House of Cards, Netflix’s first original program. Created using our own viewing habits, and offering a full season of first-run episodes available for binge viewing, the streaming giant was poised to change, if not derail the entire medium of television. Now Netflix has an increasing library of original programming that is doing well commercially and critically, including some recent Emmy wins.
Given the evolution, it’s not surprising to see Netflix make a strategic priority out of building its library of homegrown shows and movies. According to Deadline, the company is eyeing a content mix that includes 50 percent original programming. Speaking to investors at the festively titled Goldman Sachs Communacopia Conference, Netflix CFO David Wells laid out the content vision.
“It will take us a couple more years” to reach that mix, said Wells. “We’re a third to halfway to where we want to be…[w]e’ve got a ways to go.” Because this was a meeting of investors, Wells then addressed the elephant in the room, cautioning they would be spending upwards of $1 billion to expand the original content funnel. Arguing that Netflix was not as levered with debt as its competitors, Wells projected confidence in a “reliable revenue stream” to fund this growth.
In addition to the increase in original content, Wells spoke to the state of subscription, which was below expectations earlier this year, and pushed back against claims of a sub-par user experience in foreign markets. “The U.S. is not the highest country in terms of media hours viewed,” Wells explained as evidence that they must be doing something right for overseas subscribers.
There were no details regarding the creative direction of the new content, except to say that Wells was “pleased with [the Netflix original] Adam Sandler movies,” reassuring Adam Sandler fans, while possibly concerning fans of actual comedy films. Late last year, content chief Ted Sarantos swore the company would double its original content in the next year, bringing the total number of original programs to 31. That’s still a far cry from representing half of Netflix’s overall offerings, though.