Netflix original programming will consume 10-15 percent of...

The goal will be to have a new series start every three weeks, with original programming increasingly taking a larger share of Netflix’s TV content business, Sarandos told us. TV-related programs account for about 66 percent of Netflix’s catalog, driven largely by Internet streaming, while movies are the remainder, Sarandos said. Netflix has pledged to spend $200 million annually on original content. But while House of Cards, which first aired in February, gained a wide audience, the more recent horror series Hemlock Grove had a narrower audience. Arrested Development, with a built-in fan base, popped up on various file-sharing websites shortly after first airing and was downloaded 100,000 times within the first 24 hours, analysts have said. Netflix also is expected to launch in December Turbo: F.A.S.T. (Fast Action Stunt Team), a children’s series developed with DreamWorks Animation, which is releasing a film version on July 19. “The outcome so far as we have added each series, it has grown the total audience” and hasn’t cut into viewing of Netflix’s other movies and TV programming, Sarandos said: “With 20 shows annually” by 2016, “figure on watching a new show every three weeks and our model can support that.” Netflix also signed an agreement in December with Disney to be exclusive subscription service for it starting in 2016 and will release Orange Is the New Black on July 11. Netflix is largely releasing original programming in the international market at the same time it’s available in the U.S., Sarandos said. Among the exceptions is Ricky Gervais’s Derek, which originally premiered on U.K. TV’s Channel 4 in April 2012 and will be streamed in the U.S. on Sept. 12 as seven half-hour episodes. Netflix also offered the Lilyhammer series in February 2012, a month after it premiered on Norway’s NRK1-TV. Eighteen percent, or 6.3 million Netflix subscribers, are in international markets and an equal number have been accessing the original programming, Sarandos said. Netflix added a net 1 million international streaming subscribers in Q1 as revenue rose to $142 million from $42.4 million. In North America, Netflix added a net 2 million streaming subscribers to end Q1 with 27.9 million paid customers, up from 22 million a year earlier. North American sales grew to $638.6 million from $506.6 million a year earlier. In the North American DVD-by-mail business, Netflix lost a net 241,000 subscribers, ending Q1 with 7.8 million, down from 9.9 million last year. Netflix ended Q1 with $5.67 billion in streaming content obligations, including $1.3 billion that were listed as “current,” the company said. Another $3.3 billion in content-related “obligations” weren’t listed on the company’s Q1 balance sheet since they didn’t yet meet criteria for being recognized as assets, Netflix said. Meanwhile, Netflix is continuing discussions with Viacom on potentially renewing a distribution agreement that expired this month, Sarandos said. While Netflix lost access to Nickelodeon, MTV and BET programming, it has since added Disney Jr.’s Jake and the Neverland Pirates and Cartoon Network’s Adventure Time. “At the end of the day, it is what is the most relevant content for our subscribers and I feel like that was the right tradeoff,” Sarandos said. Netflix also has no plans to add sports programming, he said. “Our focus really is on things with a really long shelf life and that is where we do best.”