Is Netflix the new HBO?
Streaming service produces more original shows than cable network
Look out, HBO. Netflix produced more original programming than cable’s premium-network leader last year, according to numbers provided by the two rivals. The Internet video service isn’t slowing down, either, even if it risks losing subscribers to price increases that will help pay for more exclusive shows.
Since its push into original shows kicked off in earnest with the 2013 debut of House of Cards, Netflix has hit the fast-forward button. Last year, it put out 450 hours of original programming, compared to 401 from Time Warner’s HBO. This year, both companies say they expect to release roughly 600 hours of original material.
HBO is the network Netflix CEO Reed Hastings set out to emulate when his service began charting a course away from streaming TV reruns and previously released movies. Ted Sarandos, the company’s head of programming, famously told GQ back in 2013 that Netflix’s goal was “to become HBO faster than HBO can become us.”
With Netflix now available in 190 countries, Hastings expects Netflix to surpass 100 million subscribers next year. During a review of Netflix’s results on Monday, Hastings declared the company “really excited” about the boost it expects from its growing library of exclusive programs.
Netflix will soon test the loyalty of its longtime Canadian subscribers when it hikes its prices, following a freeze that kept rates at $7.99 per month. Going forward, $7.99 a month will only cover SD streaming, while users who wish to continue on a HD plan will have to pay $9.99.
Original programming doesn’t come cheap. The Los Gatos, Calif., company ended March with $12.3 billion committed to Internet streaming rights, nearly double the $5.6 billion it spent at the end of 2012.
Netflix hasn’t disclosed how much of that spending has gone toward original series and exclusive movies, but the percentage has been steadily increasing.
The cost of licensing and overseas expansion has whittled Netflix’s profit margins. In its first-quarter results released late Monday, the company said it earned $28 million, or six cents per share, on revenue of nearly $2 billion. Investors, though, are far more focused the company’s subscriber growth.
Original programming appears to be a major draw for many subscribers. HBO, however, still has a huge advantage over Netflix in terms of prestige. Last year, HBO won 43 Emmys, more than any other TV network, while Netflix’s original programs garnered just four.