Netflix takes on Hollywood: Streaming service to make original films

Rising profits and subscriber numbers mean the company can afford to be bullish about funding new TV and film content

Original dramas including Orange is the New Black have helped bring in Netflix subscribers, awards and rising profits. After taking on network broadcasters, now the online streaming service plans to take on Hollywood by making original films for the first time.

Alongside its archive of television, which includes Breaking Bad and Sons of Anarchy, and its films, Netflix has invested in its own material.

Orange is the New Black, a drama set in a women's prison starring Taylor Schilling, will this year become its most watched original show. Earlier this year, Kevin Spacey's House of Cards, the remake of the 1990s UK show, scooped three Emmys.

The streaming service, run by chief executive Reed Hastings, plans to double its investment in original material next year, which will include its first original films as well as documentaries that will debut on the site.

Chief content officer Ted Sarandos said at the company's third quarter earnings announcement this week: "On the movie side, I'd keep my mind wide open to what those films would be and what they would look like."

Netflix now has more than 40 million subscribers around the world and that number could rise by more than 4 million by the end of the year, the company said. The service launched in the UK in January last year and has signed a deal with Virgin Media to allow users to access it through their set top boxes.

In a letter to investors, Hastings said: "Over the next few years we aspire to support the creation of some of the most compelling and remarkable content ever produced."

The group has US subscription network HBO in its sights. Mr Hastings has said previously that Netflix "wants to become HBO faster than HBO can become Netflix".

Profits in the three months to the end of September rose to $31.8m from $7.7m a year earlier, and shares have more than doubled in value in just six months. Tuna Amobi, analyst at Standard & Poor's, said there was "a whole lot of momentum behind the story".

Banking analysts such as JP Morgan's Doug Anmuth believe the move into original content has helped differentiate Netflix from other streaming services.

Next year's spending on original content will still make up less than a tenth of its total budget spend on programming. Mr Sarandos said: "There's a big gap from where we are to where we could be."

The new series of Orange is the New Black and House of Cards will stream next year. The company has recently been pushing another original show, the horror Hemlock Grove. Another major commission by Netflix was Arrested Development.

It financed a fourth season of the cult comedy, after the show, which starred Jason Bateman and Michael Cera, was cancelled by its network.

Next year Netflix will premiere Sense8, from the Wachowskis, the team behind The Matrix. Mr Sarandos called it "adult contemporary sci-fi… done in a way that's very difficult to do for television". There is also a deal with DreamWorks Animation which will start with an original series, Turbo: F.A.S.T.

Netflix will not be expanding into sport any time soon, despite rumours of conversations with American Football body the NFL. Mr Sarandos said: "We're still not interested in sports," saying its on-demand format does not "bring much to sports viewing".

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