Company dips $4.6 million in first quarter
Netflix wants to remember the first quarter of 2012 for something more significant than its first net loss in seven years: the launch of its original programming efforts.CEO Reed Hastings wouldn’t divulge specific audience figures for “Lilyhammer,” which premiered in January, but hailed it as a success. “It was quite successful for the amount that we invested,” he said on the call following Netflix’s earnings report. “It parallels some of the other premium exclusive content that we’ve got, like a ‘Breaking Bad,’ in terms of ratio of cost to viewing.” “Lilyhammer,” an eight-episode long-form dramedy series im ported from Norwegian TV, was the first of a slate of programming hitting Netflix in the coming years. Netflix has already ordered a second season of “Lilyhammer,” which stars Steven Van Zandt as a mobster in the witness-protection program. Following “Lilyhammer” into Netflix’s original programming pipeline is “House of Cards,” an adaptation of the BBC drama series with Kevin Spacey attached to star; a revival of the Fox sitcom “Arrested Development; comedy series “Orange is the New Black,” from “Weeds” creator Jenji Kohan; and “Hemlock Grove,” a new suspense series based on the Brian McGreevy novel from “Hostel” director Eli Roth. The launch was a bright spot in an otherwise dark quarter for Netflix, which posted a loss of $4.6 million from a profit of over $60 million the year earlier. The stock plummeted 17 percent to $84.85 in after-hours trading, down from a close at $101.84. In his letter to investors, Hastings signaled he’s upgraded Netflix’s original programming efforts from “strategic experiment” to “strategic expansion.” “In particular, we are now treating it as a capability we should build, like international, to achieve our long-term ambitions,” he wrote. “What is still uncertain is when or whether we will take it beyond 5% of our large content spend. We’ll take it year by year, and see how good we can get at originals for our members.” Netflix has previously indicated its overall streaming content costs would total $3.9 billion in 2011. That figure was projected to rise this year, but Hastings warned it would not exceed the rate of revenue returns from its subscriber base. Netflix said it added nearly 3 million streaming members in the March quarter, bringing the total to over 26 million global streaming members. Domestically, streaming members grew 1.7 million quarter to quarter for a total of 23.4 million. In other Netflix programming news, Hastings indicated that the removal of Disney and Sony titles derived from the Starz deal that expired in February didn’t have much impact on the level of viewership.