The latest pronouncement from Netflix seems to confirm that the rapidly-evolving company is pivoting yet again.
On May 30th, 2013, Chief Content Officer, Ted Sarandos, speaking at a conference in NY, said that Netflix is going to increase their investment in original output over the next few years, spending as much as 15 percent of its entire licensing budget on new stuff that Netflix can offer exclusively.
This original content is in addition to the 10,000+ titles that Netflix offers for streaming that are not originals. (Netflix doesn't officially say how many titles are available for streaming on their service - but others are trying to count: "According to our count, it's about 13,000," said Daniel Choi of InstantWatcher.com, a website that uses the Netflix API to track streaming content. "But there are two different ways of counting. We count all television series as one title each. If you split up the TV series into individual episodes, that count will go up.")
Subscribers to Netflix should expect the limited number of original series (notably, so far, House of Cards and Arrested Development) on Netflix to double by the end of 2014.
I understand why Netflix is moving in this direction (pivoting from licensing content that has been available on other platforms, to investing hundreds of millions in and then licensing original content). The marketing power of all the Arrested Development hype has certainly burnished the Netflix brand... In the past year Netflix has added subscribers and become better known through House of Cards and Arrested Development... But making a few movies and TV shows is not a sure-fire route to a sustainable business.
As I've written previously on this blog, the internet has changed many things - but it hasn't changed everything. And, at a certain point, Netflix will have capped out in market share (they won't be able to grow audience in the same dramatic way anymore) and then making original content that viewers want to pay for - while competing head-to-head with the legacy producers who own the copyrights to most of the content Netflix is already selling - may not be as easy as some stock-touters are saying.
As I've suggested before, the end game may be that Netflix becomes a takeover target (for a company that already owns a library?) - or that Netflix uses some of their money and stock market gloss to acquire a legacy studio...