Watch out, HBO. Netflix is breathing down your neck. First, Netflix got into the original series business (garnering 14 Emmy nominations last week for its shows). Now the streaming company is planning to branch into original documentaries and stand-up comedy specials, both of which HBO has been specializing in for years.
"Beyond series, we will be expanding our Originals initiative to include broadly appealing feature documentaries and stand-up comedy specials," Netflix CEO Reed Hastings and CFO David Wells said in a letter to investors announcing the company's second-quarter earnings. "Netflix has become a big destination for fans of these much loved and often under-distributed genres."
Although Netflix didn't reveal details about its plans, we have to wonder whether they'll be new additions on the festival circuit on the lookout for the next hot doc -- and competing with HBO's well-respected documentary unit, not to mention more recent additions launched at Showtime and CNN, for acquisitions.
Instead of a traditional conference call to announce earnings, Netflix held a video chat via YouTube.Hastings, Wells and chief content officer, Ted Sarandos, fielded questions about the company's earnings as well as its foray into original programming.
The executives acknowledged that Netflix licenses its original content and does not own exclusive rights to its shows. But they said they plan to "build out the infrastructure" in time.
Although Netflix continues to tout their programming as successful, the company refuses to disclose viewership numbers. "Without giving ratings numbers, I will tell you that every once of these shows are attractive TV-sized audiences," said Sarandos. "You know people are watching it and you know people are talking about it."
When asked what constitutes a "hit" show, Hastings said, "A hit is something we want to renew."
Given that Amazon and Hulu are also investing in original content, it's likely that prices for licensed content will rise, but Hastings said he wasn't concerned about what the competition is doing.
"When Showtime does great work, it doesn't take away from HBO. Hulu and Amazon will do great originals," said Hastings. "We really just focus on making our service the best it can be."
Later this month, Netflix will premiere "Mako Mermaids," an Australian series aimed at teens. And later this year, Netflix will launch "Derek," the new series from Ricky Gervais, and season two of "Lilyhammer," as well as "Turbo: F.A.S.T. (Fast Action Stunt Team), their first animated original from DreamWorks Animation.
"We're excited about our plans for 2014 and beyond as we premiere season two of 'House of Cards,' 'Hemlock Grove,' and 'Orange is the New Black,' and debut 'Sense 8,' and multiple kids Originals from DreamWorks Animation," said Hastings and Wells in the earnings letter.
Meanwhile, Netflix shares were down on Wall Street as the number of subscribers disappointed traders even as earnings were up. Netflix earned $29.5 million, or 49 cents a share, up from $6 million, or 11 cents, last year. Revenue was up 20% at $1.07 billion.
Netflix added a significant 630,000 U.S. subscribers in the quarter, bringing the subscriber base up to about 30 million-- an impressive number, but not as high as expected.