Netflix Investing In More Original Content Will Probably Mean A Price Hike For Subscribers


Netflix Investing In More Original Content Will Probably Mean A Price Hike For Subscribers

Netflix’s trend towards creating more original content as part of its lineup is only going to grow. On Wednesday, the company’s executives confirmed this theory.

Netflix CEO Reed Hastings said that the service’s original shows like “Orange is the New Black” and “House of Cards” creates loyalty and “desire” in the company’s customers - much more so than licensed content. He observed that original shows and movies get viewers hooked - likely to the point where a subscriber might be happy to pay a little more per month.

Hastings did not provide a specific price for future subscriptions but stated that, “The more we have incredible value, the more we have amazing originals, then we are going to be able to ask consumers for more to be able to invest more.” Essentially that means that more original shows and movies on Netflix equate to higher fees.

The independent research seems to back up Hastings’ theory. Subscribers love to binge watch their favorite original shows.

Netflix plans to spend around $5 billion on producing original content next year. The company only has $2 billion in the bank but it plans on raising new capital.

The company is betting that more original content will mean higher profits. CFO David Wells notes that, “We have gone into [original content] very conservative relative to licensing, and found it has been much more impactful.” Hastings simply describes it as “better.”

Hastings also points out that as shows go into their third or fourth seasons and have gained some buzz and recognition, the value of the content goes up as well.

Netflix is not forgetting about original programming for children, either. The service plans on streaming two different original LEGO series in 2016: LEGO: Bionicle and LEGO Friends: The Power of Friendship. Several more series are in the works.

Andy Yeatman, Netflix’s director of global kids content, said in a statement that, “Roughly half of our 65 million members around the world regularly watch kids content and with the addition of these [several, original] diverse series we are continuing our strong investment in kids programming. We know kids love Netflix and that’s in part because they never really outgrow us. We program and recommend new TV shows and movies from preschool through their teen years and into adulthood.”

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