Netflix will double its spending on original programming...

Wells didn’t say how much Netflix will budget for original content in 2014, but Chief Content Officer Ted Sarandos has said it could be 10 percent to 15 percent of operating expenses by 2016 (CED May 31 p1). Netflix is expected to launch the first wave of animation from DreamWorks late this year and in 2014, along with a second seasons of House of Cards, Hemlock Grove and Orange is the new Black and is “actively looking” at “a few” documentaries, Wells said. The documentaries would premier on Netflix, he said. “It just takes a long time in terms of lead time to get the shows out and with the commitment to quality to get those out, but doubling expense over time is certainly there” for original content, Wells said. “We have talked about 10 percent, 20 percent and 25 percent” of annual operating expenses, but “we don’t know what the right number is. We know it is going to grow over time and with the success we have had to date, we are going to continue to expand it.” Among its new content, Orange is the new Black will be Netflix’s most watched original series ever by the end of the year, the company said. Netflix confirmed talks with cable operators about pre-loading the service in set-top boxes. But Netflix and cable operators have yet to “figure out deal terms that make sense for both sides,” CEO Reed Hastings said. Netflix’s Open Connect content delivery network (CDN) that’s built into its service and is being deployed by Virgin Media in the U.K. has weighed “a little bit” on the company’s securing wholesale deals with cable operators, Hastings said. Netflix has agreements with 10 ISPs, including Bell Canada, Cablevision and Google Fiber in addition to Virgin, the company has said. ISPs can link the Open Connect for free by tying to common Internet exchanges. Under Open Connect, Netflix shares its hardware design and open source software components of the server, the company has said. “What we want to do is have a great experience on these boxes and the ISPs that directly connect to our Open Connect CDN get a better experience, higher video quality, less rebuffering,” Hastings said. “I don’t think it would be a problem to be on a Comcast box and presumably others. Historically there were some concerns, but I think we are through those at this point.” Comcast officials didn’t comment. In September, Netflix made Super HD titles -- which the company said are comparable to Blu-ray video quality -- and 3D content available to all members instead of only those whose broadband service was part of Open Connect. The change was made to accommodate the arrival of 4K on Netflix in 2014, Hastings said. “We want to be one of the big suppliers of 4K content next year and we didn’t want to complicate things as to which networks it is available on” by restricting it to Open Connect-equipped broadband services, he said. The change with Super HD was “really driven by the impending expansion of 4K next year, Hastings said.