6 Big Takeaways From The Netflix Earnings Announcement

Netflix will air 600 hours of original programming this year — a whopping 150-hour increase from 2015. That 600 hours breaks down to:

• 30 original series, including returning shows like House of Cards, Marvel’s Daredevil, Unbreakable Kimmy Schmidt and Orange Is the New Black, and new shows like Full House reboot Fuller House, Judd Apatow’s Love and Will Arnett’s Flaked;
• 35 new seasons of original children’s programming;
• 12 documentaries, including Michael Pollan’s Cooked and the four-episode Chelsea Handler’s Chelsea Does.
• 9 stand-up specials, including Ricardo O’Farrill, Hannibal Buress, Patton Oswalt, Theo Von, and Tom Segura; and
• 8 feature films, including the Christopher Guest comedy Mascots, war drama Jadotville, and Pee-wee’s Big Holiday.

The 600 hours of original programming likely doesn’t include the as-yet-unnamed Chelsea Handler talk show — not to be confused with the four-part Chelsea Does documentary series — that begins later this year and will air on weeknights. Netflix did not address the talk show in its release or during the earnings call.

Netflix CFO David Wells said that network’s original programming will continue to grow in future years. “We still think there is great content to be added to the U.S. side that is efficient, that will continue to increase the attractiveness and competitiveness of the offering in the U.S.,” Wells said. “We’re going to continue to add to that service. It’s at slower rate of growth, but it continues to grow.”

Netflix said it has reached 75 million subscribers and added 17 million of them — 23 percent of its subscriber base — during 2015. The company projects growth of an additional 6 million subscribers during the first quarter of 2016. Given that Netflix launched in Japan, Spain, Portugal and Italy in the fall and expanded its reach last week to 130 new countries, much of that growth will come internationally. Netflix estimates that its 130 new markets have 360 million broadband-enabled homes that could become Netflix subscribers.

Of those 75 million subscribers, 45 million are in the United States, where subscriber growth slowed to 1.6 million new U.S. subscribers in the fourth quarter of 2015 vs. 1.9 million in the same quarter the year before. Netflix projects growth of 1.8 million new subscribers in the first quarter of 2016 vs. 2.3 million the year before. The reason for the slowdown is simple market saturation — Netflix is already in nearly half of U.S. broadband-enabled households.

Although new Netflix subscribers pay $10 a month for the most common plan, many longtime subscribers are still paying $8 a month. If you are grandfathered into the old pricing, you’ll start seeing an increase this summer. If the thought of that extra $2 stresses you out, you can downgrade from HD to SD service to stay at $8. It won’t look as good on your big TV but would be fine for most mobile devices.

Given that most of the $8 subscribers have on Netflix for two years or longer, the company said it expects few of those people to balk at the price increase.

Although Netflix does not release ratings data for its original shows and movies, content chief Ted Sarandos said the scorchingly popular Making a Murder documentary series “performed at the same level as some of our scripted series” during the holiday break. Added a somewhat surprised Netflix CEO Reed Hastings: “When I met with the filmmakers and heard about the murder, I thought it would be a specialty thing.”

Making a Murderer was decidedly not a specialty thing. The 10-episode series about a man who was charged with murder after being exonerated of an unrelated sexual assault conviction was the talk of the holiday season — dominating everything from Twitter to tabloids to Nancy Grace. (Decider’s writers were quite taken with both the show and the whole universe of lawyers, analysts, explainers, watchers, he-did-it purists and he-didn’t-do-it defenders.)

“There was something very special about it from the beginning,” Netflix programming chef Ted Sarandos said. “When it came to us, it was seven years in the making already, and it came to us over three years ago. We recognized then — even before we were making original documentaries — that [the producers] had something special on their hands.”

In a somewhat unusual note, the earnings release actually commented on the fact that other network executives are talking a lot of smack about Netflix. During at the Television Critics Association press tour last week, NBC’s ratings guru laid out research based on audio sampling that estimated Netflix’s top shows as having no better ratings than network shows — Netflix disputed the accuracy of those estimates — and saying, bizarrely, that linear TV is “TV like God intended.” Netflix had a little fun with that quip, noting:

“Our investors are not as sure of God’s intentions for TV, and instead think that Internet TV is a fundamentally better entertainment experience that will gain share for many years.”

Netflix also shrugged off broadcast and cable networks’ collective obsession with the fact that Netflix doesn’t release ratings — which determine the ad rates upon which linear networks are paid — as a meaningless stat for an SVOD service that doesn’t make its money from advertising.

The Netflix executives had more positive things to say about HBO as a global competitor.

“HBO has been a great competitor, one we have admired for a very long time,” Netflix CEO Reed Hastings said. “You might have seen the recent news that they are offering HBO Now direct-to-consumer in new nations. They started in the Nordics, then some countries in Latin America, now in Spain. They will be a formidable global competitor over time independent of their ownership.”

Scott Porch writes about the streaming-media industry for Decider. He is also a contributing writer for Signature and The Daily Beast. You can follow him on Twitter @ScottPorch.