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Netflix to step up production efforts

Netflix is set to ramp up its original production efforts, potentially moving to an HBO model where it spends a third of its content budget on its own shows, according to CEO Reed Hastings.

Reed Hastings

Reed Hastings

Hastings said though Netflix is still “feeling its way along” in the original content space, it plans to increase spend there – depending on the success of its current slate of original programming.

“It’s a hypothesis that we can produce great content that members want to watch. If we can, and if we prove that to ourselves and to our membership, then we’ll do more and more,” said Hastings, speaking at The Guardian Changing Media Summit yesterday.

“The parallel potentially is that HBO spends about a third of its budget on originals and two-thirds on other people’s movies. So that’s an example in the States. We will certainly increase our original programming. We’re at less than 10% today.”

Talking about the firm’s wider growth efforts, Hastings also said Netflix is already looking at “what will be next” in terms of new market opportunities. This, despite the firm saying earlier this year it will pause from launching in any new countries until it returns to global profitability, following its launch in the UK and Ireland in January.

“We are very focused on expanding nation-by-nation around the world and becoming a full global service like YouTube,” said Hastings, who added the firm would also be open to bundling Netflix with other services provided by the likes of internet service providers.

“It’s really important we own the user experience but, for example, if you look at our Apple TV arrangement, we’re fine having Apple do the billing if it’s more convenient for the consumer. We’d be fine with other people doing the billing too.”

As for Netflix’s UK performance so far, the CEO said it was exceeding expectations. However, he said it would take longer to grow the brand than it did when Netflix launched in Canada, as there was a strong cross-over effect from its US advertising in that market.

In Canada, Hastings claimed it took about 18 months for the service to be in around 10% of households. In the UK, he said “10% is very achievable. We will get there, it’s just not going to happen in 18 months.”

Discussing competition from BSkyB’s planned online service Now TV, Hastings said he would like to compete head-on with the service, which will include Sky Movies content, but admitted it was a “fearsome competitor.”

He added that right now, he didn’t see the need for government regulation over Sky’s grip on the UK market, but claimed that if Netflix was unable to wrest one of Sky’s six major studio deals away from it in the next year or two, then “something’s not quite right.”

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