Netflix Adding 150 Hours of HDR Content by Year-end, Hastings Says

“Pushing the boundaries on video quality” is a passion for Netflix, Hunt said, saying the company is especially excited by HDR. “While 4K offers more pixels, HDR offers better pixels that have greater depth, and on HDR screens you get brighter highlights, more detail in dark scenes, and a wider color range that more closely matches the real world,” Hunt said. Netflix has 10 times the number of 4K titles it had at the start, and it plans to grow its catalog of HDR titles at a similar pace, he said. Netflix’s original series Marco Polo is available in HDR to subscribers on the $11.99 Ultra HD plan that allows users to view four screens at a time.

Hunt cited Dolby Vision for the brightness, contrast and color it brings to OTT online streaming services, including Vudu, along with broadcast and gaming applications. He cited LG and Vizio Dolby Vision-compatible HDR TV. Upcoming Netflix titles available in both Dolby Vision and HDR: A Series of Unfortunate Events, Bloodline, Chef’s Table, Hibana, Knights of Sidonia, Marvel’s Daredevil, Marvel’s Iron Fist, Marvel’s Jessica Jones, Marvel’s Luke Cage, Marvel’s The Defenders, The Do-Over and The Ridiculous 6.

On Netflix’s Q1 earnings interview Monday, CEO Reed Hastings said Netflix “should keep an open mind” about giving subscribers the ability to download some of its content as Amazon does, in response to an analyst’s question. “We’ve been so focused on ‘click and watch’ and the beauty and simplicity of streaming, but as we expand around the world, where we see an uneven set of networks, it’s something we should keep an open mind about.”

Hastings said virtual reality is likely to be the domain of gaming systems over the next few years due to the technology’s “heritage to console gaming.” Beyond that, “everybody hopes that it matures into something that’s lower cost and more ubiquitous," he said. "I don’t think it will have a direct effect on us in the next couple of years because I think the center point for VR will be other sorts of things than watching a TV show in a VR headset. I don’t think that will be very popular,” Hastings said.

Ultra HD 4K is becoming more popular with subscribers as 4K TVs and content become more prevalent. “If you spend a thousand [dollars] or $2,000 for a 4K TV, it’s pretty natural to bump your Netflix to the $12 plan” to have access to 4K content “and see what your TV can really do,” Hastings said. He said the $7.99 standard-definition option is a strong choice for customers who view Netflix on mobile devices. “We’re not trying to bias people; we’re trying to help them make a choice that they feel good about.”

On the impending price hike to $9.99 for HD subscribers grandfathered in at the $7.99 rate -- which a Netflix spokeswoman told us last week would happen on a staggered schedule according to member billing cycles (see 1604080047) -- Hastings said the staggered approach is “a little bit cautious, but it won’t hurt. We don’t particularly need the revenue in the short term so it’s fine to just spread it out.”

Responding to an analyst’s question, Hastings downplayed the impact of Amazon’s news Sunday that it's breaking out Prime Video as an a la carte option, making it a direct competitor to Netflix for video-driven streaming subscriptions. “Hulu is doing some great work, Amazon is, HBO, Showtime. ... There are so many competitors, and everybody is working hard to build the best content,” he said, citing growth in the Internet TV market overall. “It’s natural that everybody’s coming in as they realize that the future is Internet TV.” Hastings said Netflix not only is expanding its number of original series, but it’s also expanding into original movies as part of "the natural evolution from linear TV to Internet TV.”

Another analyst question focused on Amazon’s talk of possibly offering linear channels of live content and whether Netflix is considering it as well. Hastings said Netflix is focused on global competition for now and the company is nearing a 50/50 split on domestic and international revenue. It's producing content around the world toward that end, Hastings said. “That’s very different from carrying other people’s single-nation networks,” he said.

Among analysts Tuesday, Wedbush’s Michael Pachter said Netflix’s current stock price “fails to address the potential for meaningful competition from Amazon,” following the announcement of the Prime video-only service. Pachter doesn’t think Amazon will cause many Netflix customers to defect, but “it is foolish to assume that potential SVOD customers will favor Netflix over Amazon every time.” Netflix still has a “much more powerful” brand for SVOD than Amazon, but “once it announced a standalone service, Amazon declared war on Netflix, and intends to back up its new offering with a branding strategy of its own,” Pachter said. Wedbush expects Netflix international subscribers to grow by 2 million over last year, although Pachter sees net subscriber additions shrinking in 2016 vs. last year.

BTIG Research analyst Richard Greenfield said with Netflix headed toward adding 5 million subscribers this year -- to end the year with a 50 million U.S. subscriber base consuming two hours of content per day -- “the threat to linear television and the big [multichannel video programming distributor] MVPD bundle has never been greater.” Netflix’s success in adding U.S. subscribers is “a testament to the consumer demand for their original and syndicated content, combined with an industry-leading streaming technology platform."

Netflix shares closed down Tuesday 13 percent to $94.34.