Reed Hastings, chief executive of Netflix, said his company’s rivalry with HBO will “be like the Yankees and the Red Sox.” CreditBernd Von Jutrczenka/DPA, via Agence France-Presse — Getty Image
LOS GATOS, Calif. — It is April 9 just before midnight in the war room ofNetflix’s headquarters here, where the smell of popcorn fills the air and a team of engineers, social media experts and other specialists starts counting down the seconds until the new “Daredevil” superhero series goes live on the streaming service.
At the stroke of 12, applause breaks out in the room. Flutes of Champagne are passed around as the Netflix team checks that the series is available for binge watching across devices in more than 50 countries around the world.
“Daredevil” is the 17th Netflix original series to make its debut this year, representing a bold bet by the company to significantly increase its investment in exclusive programming. Just three years after Netflix started streaming its first original series, “Lilyhammer,” the company is planning 320 hours of original programming in 2015. That is about three times what it offered last year.
Reed Hastings, Netflix’s chief executive, is a connoisseur of them all, though he admits some run more to his tastes than others. During an interview the next afternoon, he said that he had watched the first episode of “Daredevil,” but called it “too violent” for him.
“I can barely handle ‘House of Cards,’ ” he said, referring to the political drama starring Kevin Spacey that put Netflix on the map in 2013 as an outlet for innovative programming with high production quality. “When someone dies, I’m like ‘Wooooow turn it off.’ ”
Mr. Hastings called himself a fan of “Unbreakable Kimmy Schmidt,” the new Tina Fey comedy starring Ellie Kemper about the life of a Pollyanna-like woman after her escape from a cult after 15 years. He said that he intermixes the series with the dark family drama “Bloodline.”
“It’s the tension of ‘Bloodline’ versus the mirth of ‘Unbreakable,’ ” he said.
That expanding range of original programming available on Netflix signals how Mr. Hastings wants to position the company as the entertainment world undergoes a digital revolution.
Traditionally, television networks needed to stand for something to carve out an audience, he said, whereas the Internet allows brands to mean different things to different people because the service can be personalized for individual viewers.
That means that for a conservative Christian family, Netflix should stand for wholesome entertainment, and, for a 20-year-old New York college student, it should be much more on the edge, he said.
“We want the original content to be as broad as human experience,” he said.
The emphasis on original content is an extension of Netflix’s long-term view that the Internet is replacing television, that apps are replacing channels and that screens are proliferating, Mr. Hastings said.
“We’ve had 80 years of linear TV, and it’s been amazing, and in its day the fax machine was amazing,” he said. “The next 20 years will be this transformation from linear TV to Internet TV.”
Netflix shares soared about 25 percent last week on news that it had added a record 4.9 million subscribers in the first quarter of 2015, bringing its total number of paid streaming subscribers to 59.6 million. The company beat expectations for growth and gave investors reason to believe that it still has much more room to grow.
“Think about the simplistic equation: More good content equals more viewing, more viewing means more subscribers, more subscribers means money to spend on more programming, which means more subscribers,” said Rich Greenfield, an analyst with BTIG Research. “It is a virtuous cycle.”
But some analysts have expressed concern about the company’s long-term prospects for more growth in the United States, where it is profitable. Another big concern is the increase in costs from paying for content, especially if Netflix cannot sustain the same hit level as its early efforts.
Global expansion, which is more costly and drags on profits, is also a concern. Netflix has said it would complete its international efforts in the next two years.
Netflix also faces a new wave of intense competition in the United States as a number of tech and media companies introduce streaming services. That includes HBO, which recently started HBO Now, which does not require a cable or satellite subscription.
Mr. Hastings said that he welcomed the new streaming entrants. Rather than a competitive threat, they represent the realization of the benefits of on-demand streaming television that allows people to watch shows on their own schedule and on the devices of their choosing, he said.
Mr. Hastings joked that people would know HBO is serious about streaming when it reverses the way it refers to its offerings and rebrands HBO Now as HBO. “They will take HBO linear and call it HBO Linear,” he said. “That is HBO if you really want to watch it on somebody else’s schedule.”
He added that people are likely to subscribe to more than one service because services offer different programs and that the rivalry will not only increase creativity but also provide a stronger alternative to traditional television.
“It will be like the Yankees and the Red Sox,” Mr. Hastings said. “I predict HBO will do the best creative work of their lives in the next 10 years because they are on war footing. They haven’t really had a challenge for a long time, and now they do. It’s going to spur us both on to incredible work.”
Richard Plepler, the chief executive of HBO, said in a recent interview that the increasing competition was forcing the network to focus even more intently on programming.
“People are going to take gibes,” he said. Pausing after each word for effect, he added; “Play our game. That is what we focus on. I can’t emphasize this enough: We cannot get distracted.”
Some television executives have started to worry that the rise in Netflix viewing — its members streamed 10 billion hours in the first quarter — is cutting into the time that people spend watching traditional, ad-supported television.
The fear is that advertisers will start cutting their spending on television, which captures about $70 billion in the United States each year, and shift to digital outlets. That has led to questions about whether television networks would reduce the amount of programming they sell to Netflix.
Mr. Hastings said that he does not view Netflix as a threat to ad spending because the service is commercial free. If the television networks stop selling shows, he said, the company has a game plan. “We just do more originals,” he said.