Image source. Netflix.
During Netflix's third-quarter earnings call, Chief Content Officer Ted Sarandos was asked if Netflix is contemplating a move into news programming in order to compete with recent programming picked up by HBO. Sarandos dodged the question at first, but CEO Reed Hastings sat waiting to get a word in.
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"What's the likelihood that we compete directly with VICE in the next two years?" Hastings asked Sarandos.
"Probably high," Sarandos responded.
It seems Hastings wants everyone to know that Netflix will compete in just about every programming vertical, even though Sarandos might want to keep that information away from competitors.
With the addition of the Chelsea Handler talk show starting next year, Netflix is moving beyond the long-shelf-life content it started with in original programming. Does news content make sense for Netflix?
Big hits for HBOTime Warner's HBO started working with VICE in 2013, launching a documentary series about global political and cultural topics. The series won an Emmy award for Outstanding Informational Series or Special for its second season. This kind of programming generally has a longer shelf life, which is why it could fit in Netflix's arsenal.
HBO also has Real Time with Bill Maher, a weekly talk show about politics featuring a panel of guests and host Bill Maher. The show has been on for 13 seasons, and this is the kind of hit Netflix is looking for with the upcoming Chelsea Handler production.
HBO's latest foray into news is Last Week Tonight with John Oliver. After poaching the Daily Show correspondent from Comedy Central, Last Week Tonight has received four Emmy nominations, winning one. This is another kind of programming with a longer shelf life than simple news reporting that Netflix may be interested in.
Starting next year, however, HBO will make its biggest bet on news programming yet. It's working with VICE to produce a daily half-hour news show. It's not clear if Hastings was referring to this daily programming or VICE's documentary-type work with HBO in his question to Sarandos.
The way we consume news is changingNews on Netflix may work because the way we consume news is rapidly changing. Gone are the days where we wait around for the nightly news broadcast. If we want to find out what's going on in the world, we open up a web browser or a social media app. We get our news on demand just like we get our Netflix shows.
With that in mind, a weekly or nightly Netflix program focused on news could fit perfectly into the new news consumption paradigm. As more people get their news from the Internet, Netflix could be just one more site to check for information and commentary.
But why bother?Producing a hit news program isn't easy. If it were, more people would watch CNN. It costs a lot of money to produce a show good enough for a significant number of people to watch, so the margins on news programming are generally pretty thin.
But Netflix doesn't have to make money on news programming. It could be used as a tool to get viewers to come back to Netflix every day and find something else to watch. That could reinforce the value of its service with customers and reduce churn. It could also enable it to raise its prices further after two price hikes in the last 18 months.
For some, news programming could convince them that Netflix is a viable alternative to cable. That could help spur more growth in the U.S. where Netflix just reported lower-than-expected subscriber growth. Netflix is becoming increasingly saturated in the U.S., so finding new ways to grow is key to keeping investors happy. They weren't so happy with the company's third-quarter results, sending the stock down 10%.
Overall, it's worth a shot for Netflix to explore news programming, especially if the upcoming Chelsea Handler show proves popular. If Netflix renews that show and announces the development of similar shows or news programs, it's a good sign that it could see positive results from going after VICE and HBO.
The article Netflix, Inc. Wants You to Stream the News originally appeared on Fool.com.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends Time Warner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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