Netflix will double the number of original shows and movies it produces with the goal of having 40 original programs each year. Content Chief Ted Sarandos expects to reach that level in a couple of years, Wells said.
As always, Wells was cagey about how Netflix measures return on investment for these (sometimes pricey) shows in lieu of ratings (and advertising revenue):
“We don’t have to have a show that has 20 million viewers. A success for us relative to cost might be a show that’s got 2 million to 4 million viewers, and if we can find that set of people that’s going to suit us just nicely,” Wells said.
“As long as we are funding the doubles and triples we’re good. And if that content increasingly works outside the U.S. there is another advantage in terms of being able to distribute to a larger platform outside the U.S. and do that in a very efficient, quick manner where we’re bringing content that is in the right size quickly to those audiences. You don’t have to have the one- and two- and three-year delay that increasingly world consumers are intolerant of and you see that reflected in the piracy numbers.”
What’s cool and somewhat scary about the idea of global micro markets for content is that Netflix will be able to produce some very elaborate data about global media consumption for the first time ever.
The Netflix algorithms’ ability to predict ebb and flow of global tastes will surely yield some interesting insights into other facets of the collective human psyche. Take a look at this story I wrote about how Netflix-type algorithms are being used in other settings.
After testing the waters in Canada, Latin America, the United Kingdom and the Nordics, Netflix has concluded that its international model offering streaming-only with mostly Hollywood-produced content works really well, even in non-English-speaking countries. Wells said demand for “high-quality, western-produced” TV shows and movies is strong globally and international consumers are increasingly aware of streaming and of Netflix.
Thus, Netflix has been constructing content catalogs of around 80 percent Hollywood-produced content and 20 percent local content for each market, Wells said.
The strategy of acquiring popular local content extends Netflix’s “cool factor” by connecting subscribers with global zeitgeist — the same way the company aligned itself with the budding independent film movement, way back when, to culturally elevate online rental above pedestrian Blockbuster and its other store-based competition.
Wells said the top factors in choosing the next expansion market are (pretty obvious, in case you’re wondering why service hasn’t started in your area):
- Broadband penetration
- Consumption of online video
- Disposable wealth
- Netflix’s ability to accept payment in that country
Well, the FCC’s net neutrality vote could not have gone better for Netflix. This CNN piece explains what the debate is all about, and this New York Times article describes how the Internet has been transformed, at least regulatory-wise, into a public utility.
It seems obvious that Netflix would be among the first U.S. companies to take advantage of thawing relations between the U.S. and Cuba, but I wasn’t expecting this announcement at all.
“Starting today, people in Cuba with Internet connections and access to international payment methods will be able to subscribe to Netflix and instantly watch a curated selection of popular movies and TV shows.” – Netflix press release
First of all, the World Bank estimates that just 5 percent of Cubans have broadband access to watch Netflix. And the $8 per month subscription fee will seem pricey in a country where the average monthly wage apparently is $20. On one hand, this move by Netflix seems a little show-ponyish — with 11 million residents (probably 3-4 million households, only a fraction of them broadband equipped) this market won’t contribute much to subscriber growth.
And yet, Netflix co-founders Marc Randolph and Reed Hastings do have an uncanny ability to see around corners. Think of what it will be like to be on the ground floor in a country where online commerce is still forming, and where, with no entrenched broadcast or cable interests, internet television could be the primary viewing option.
Cuba is isolated enough yet close enough to U.S. culture and media to provide a real world laboratory to test some interesting paradigms. What would happen if you could build a broadband infrastructure with Internet television in mind? What if the selection of Internet TV channels was as robust as cable/satellite from the get-go — how would consumers behave? The answers could have a far-reaching effect.
Today is a pretty big day in the internet TV universe: Dish Network’s new streaming service, Sling TV, went live for preregistered customers as a first move toward a la carte channel selection by a pay-TV aggregator. Although a half-step toward true liberation from tiered cable — because you still have to buy a bundle of streaming channels – there is no contract and its costs $20 a month. I haven’t tried it yet but that seems like a pretty good deal for live streams and some on-demand content from a dozen basic cable channels like CNN, ESPN and ESPN2, the Travel Channel, HGTV, Food Network, TNT, TBS, the Disney Channel, ABC Family and Cartoon Network.
Reviews have been mixed, with some in the tech press criticizing the interface as “not ready for prime time,” and others comparing the weird conglomeration of live TV and limited on-demand content negatively with Netflix and Amazon Instant Video. But most saw this baby step into a new dawn of television and movie watching as positive. Dish is still issuing invitations to Sling TV for those who preregister, so give it a whirl and let me know what you think.
It has been four years and change since Netflix launched in its first international market — Canada — with much fanfare and a minor but embarrassing episode involving paid extras who were sprinkled into the crowd at a company-sponsored street party in Toronto. Then came the 2011 Latin American barnstorm-style rollout — Netflix’s most complicated — in which it confronted issues with weak broadband penetration, fewer digital devices, language and credit card processing issues. Great Britain and Ireland followed — with much jockeying from established competitors. Last year’s European launches looked like a snap and those markets, according to the company, been a bigger-than-expected success. And we learned last week that Netflix is fixin’ to take over the world. In two years.
Netflix’s fourth quarter earnings presentation contained the startling statement that the company can complete its international expansion– while staying profitable — in two years. That means growing from about 50 international markets to 200. And even more delightfully, it means that Content Chief Ted Sarandos soon will have the might to negotiate global content deals that enrich selection — opening new worlds of international content to U.S. subscribers and creating a new reality in which Netflix subscribers around the world are watching the same “channel.” Imagine the water cooler talk.
The company’s discovery that its original content – Marco Polo, Orange Is the New Black, House of Cards — performs more efficiently than the stuff it licenses has led to its decision to triple its spending on originals, from 100 hours in 2014 to 320 hours this year. This lovely explosion of films, documentaries, original series and comedy specials presumably will further minimize the importance of “windowing” — distribution deals that cause TV shows and movies to hopscotch aggravatingly across pay-per-view and broadcast services.
Here’s the relevant information from the earnings presentation.
This is pretty cool — Netflix has tens of millions of viewers in China and other countries where it does not officially offer service yet. U.K.-based GlobalWebIndex estimated that some 54 million people use VPNs to watch Netflix on a monthly basis.
A job listing for a language specialist on Netflix’s web site gives us clues about where the internet television channel may expand internationally in 2015 and beyond. The job description asked for native speakers of Arabic, Hungarian, Italian, Japanese, Korean, Polish and Vietnamese who would “translat(e) content materials and customiz(e) marketing for target markets…”
The company already has announced it launch into Australia and New Zealand in March. Here is the Bloomberg story and the job listing that brought these far-flung international ambitions to our attention.