Netflix doubling spend on originals, on track for 10 million intn’l subs

NetflixBuilding41-620x413Netflix says it will top the ten million international subscriber mark this year and has pledged to double what it spends on original content and move into documentaries.

Speaking about its original content strategy, the company said: “Over the next few years we aspire to support creation of some of the most compelling and remarkable content ever produced.” It will double its spend on originals in 2014 although its outlay on original content will remain less than 10% of its overall content spend.

The company never discloses viewing data, but said Orange is the New Black (pictured) is the most-watched of its slate of original dramas. It added that while the its original series generate the most headlines, its exclusive acquired series drive more viewing.

Netflix added that original factual programming is in the works: “We will soon expand into original documentaries, a category that does well on the Netflix service,” it said.

Netflix expects to top the ten million subscriber mark this year and to narrow losses from its international operations as 2013 draws to a close it said reporting third quarter results. The company plans to launch in new markets next year it added.

The US-listed streaming business added 1.4 million international customers in its third quarter with new services in the Netherlands and Nordic region boosting the customer base. At the end of the quarter it had 9.2 million international subs, 8.1 million of which were paying customers (the others taking free trials).Orange-is-the-New-Black

The latest guidance from the company was that the total will increase to 10.5 million and 9.4 million respectively before end-2013. However, Netflix said there has been a surge in low-quality free trials in Latin America which have skewed the overall numbers but the paid-for subs numbers are a reliable indicator of progress.

The company said that alongside new launches boosting numbers, subscriber additions increased year-on-year in the UK and Ireland and Canada where it had already launched. The loss from the international operations in the third quarter was US$74 million but will narrow to US$65 million in the fourth quarter, according to Netflix guidance.

The company added that it will launch in new markets next year, but did not specify when or where. Instead it referred shareholders to its long term guidance, which states: “Our strategy is to expand as quickly as possible while staying profitable on a global basis, as long as there are compelling markets to expand into, and we are continuing to see growth in our current markets.”

In its domestic US market, the company topped the 30 million subs mark, bringing its overall subscriber base to 40 million. Total quarterly revenue was US$1.1 billion compared with US$905 million at the same point a year ago. Operating profit was US$57 million versus US$16 million across the same period.

Netflix has recently struck deals with Virgin Media and Com Hem and said it is open to working with pay TV operators to launch its service on their networks. “We are open to more of these integrations with cable set-tops around the world, but given the fragmented technology footprints, we think it will be many years before cable set-top boxes match Internet set-top boxes for Netflix streaming volume. As a general rule, we’re happy to support devices from other video providers as long as we get application placement commensurate with our popularity.”


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