On the Call: Netflix CEO Reed Hastings

Associated Press

LOS GATOS, Calif. (AP) — As part of its effort to attract more subscribers, Netflix has been buying the rights to more original programming to show exclusively on its Internet video streaming service.

The first Netflix-only TV series is scheduled to debut Feb. 6 on the streaming service, which boasts 21.7 million subscribers the U.S. The eight-episode series, called "Lllyhammer," stars Steven Van Zandt as a New York mobster living in Norway. Other upcoming exclusives include "House of Cards," a TV series starring Academy Award-winning actor Kevin Spacey, and a revival of the TV series, "Arrested Development," which was shown on the Fox TV network for three season before being canceled in 2006.

That has raised questions whether Netflix intends to spend as much money on original programming as pay-TV channels such as Time Warner Inc.'s HBO and CBS Inc.'s Showtime. An analyst pressed Netflix CEO Reed Hastings for answers during a Wednesday conference call about the company's fourth-quarter earnings.

QUESTION: If you believe original programming can increase subscribers, will you commit significantly more money to this?

ANSWER: Well, HBO spends about a third to 40 percent of their budget on original (programming) and the rest on already-produced movie content. So, that would be a high-water mark, and they do a great job on those originals.

We are starting much more modestly with our originals. Some of it we will judge by how much it gets viewed and how much it costs. Is it an efficient source of programming? And does it attract new subscribers and build the reputation for Netflix? Today, it's a modest part of our budget and we will keep it as a modest part of our budget until we learn more as we go year by year.

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