US telco Verizon is reportedly planning to launch a rival to Netflix and is already talking to prospective content partners. The news came on the same day that Netflix pledged to spend up to US$300 million on original content as it ramps up competition with premium cable broadcasters.
Verizon’s service, the name of which is not yet known, will offer customers streamed content and launch in 2012, according to Reuters. It will only roll out in the areas where Verizon’s existing TV service, FiOS, does not have a presence and there is no suggestion that there are plans for it to launch internationally. However, that would still mean it could be available to 85 million homes in the US.
It is not clear what the content line-up would comprise, but the initial reports of the new service suggested that it would have various movies and, possibly, kids programming. Viacom-backed cable service Epix has a package of movies from Lionsgate, MGM and Paramount and its syndication deal with Netflix runs out next year, making that a possible target for Verizon.
Meanwhile, Netflix CEO Reed Hastings told the annual UBS Media and Communications conference in New York that it would ramp up original production following the commission of series including David Fincher’s House of Cards, new episodes of quirky sitcom Arrested Development and Lionsgate’s Orange Is The New Black.
He said that it would spend between 5% and 15% of its annual programming budget on exclusive and original content. “HBO and Netflix both spend between $1 billion and $2 billion on content a year. If you are not willing to spend at those levels, it is going to be pretty hard to compete with us or with HBO,” he said. However, acquisitions and commissions would be based on data from its 24 million subscribers. “We are very much the ‘Moneyball’ of content acquirers,” he added.
Hastings said that its priority next year is global expansion with launches in countries including the UK and Ireland. “There is a huge, global addressable market for Netflix, as long as we don’t shoot ourselves in the foot anymore,” he said. This comes as the company announced that its European headquarters will be based in Luxembourg.