Netflix is reportedly spending more than $100 million to license an original series by David Fincher and Kevin Spacey called House of Cards. So it's no surprise the deal was a focus for Netflix investors during the company's earnings call on Monday.
As one analyst pointed out—as we did on several occasions when the news first leaked—Netflix CEO Reed Hastings has indicated in the past that taking creative risks are outside the company's circle of competency. How does he reconcile his previous remarks with Netflix's investment in House of Cards?
"There is a slight shift here," Hastings told analysts. "We're willing to try [something] a little bit more riskier than we've done [before] with a little bit of our budget, and then we're going to see how it goes. Our theory is that with serialized content, we may be able to build an audience very effectively, because with on-demand you can get back to the first episode as momentum around the series builds."
Hastings added that Netflix is looking into licensing two to three similar projects in the future, although for less money than the House of Cards deal. "If we're successful, then we'd expand our circle of competency a little bit more, so we'll take it step by step," he said.
While certainly a new direction for the company, Netflix has tried to frame the issue as a business risk, and less of a creative risk. When I last spoke with Netflix VP of communications Steve Swasey he agreed that it represented a "slightly more risky approach" to acquiring content, yet still a "manageable risk."
Still, Netflix is set on making sure no investor believes it's stepping too far outside its core competency and into the creative realm. "The House of Cards deal was a prepackaged deal that came to us," said Netflix CFO David Wells on the earnings calls, with a statement that very much mirrored recent comments by Swasey. "We weren't out there looking for creative talent or directors or a script."
"It's a small nuance, but it's an important one for us, given the fact that we weren't having to manage the larger part of the creative process," he said.
[Image: Flickr user Peter J Roberts]