Netflix says rise in online video distributors benefits content owners, creators

The rising level of competition for original online video series is a benefit to premium video content owners, creators and consumers, Reed Hastings, Netflix (Nasdaq: NFLX) CEO, told investors during the company's quarterly earnings presentation. The event was webcast over YouTube, a break from the standard practice of publicly-traded companies holding a teleconference with stock analysts.

Netflix isn't alone among online video distributors looking for high-quality TV shows. In its quarterly letter to shareholders, the company noted that Amazon (Nasdaq: AMZN) and Hulu have both been active in the market as well.

"There's definitely some competition in the marketplace, which does raise the prices," said Ted Sarandos, Netflix's chief content officer. But as Netflix negotiates more and more deals, it is learning what prices it's willing and not willing to pay, Sarandos said. "One thing that's nice about that is you get to know what the walk-away prices are," he said. "And we've been comfortable with the prices we've walked away from."

Hastings elaborated: "It's great for content owners and great for creators that there's this renaissance of serialized TV. There are so many great stories to be told, it's exciting." And if more distributors are bidding on individual show, that will benefit Netflix, he added.

"If prices are going to go up, we as the one of the major scale players have an advantage," Hastings said.

And as Netflix invests more in original online programming, it will increasingly seek ownership stakes in the content it licenses, Hastings and Sarandos said.

"The more confidence we build, the more likely we'll be to take more of an ownership stake and build out that infrastructure," Sarandos said. Hastings said Netflix's approach to owning the programming is similar to the early days of HBO. "It's natural for us to grow into that," he said.

For more:
- watch the earnings webcast 
- read Netflix's letter to shareholders

Commentary: Betting on original TV online

Related articles:
Netflix in talks for season 5 of 'Arrested Development'
Netflix adds 'New Girl' from Fox


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