Netflix is aiming to fill half of its streaming catalog with its own original shows and movies in the next few years, company CFO David Wells said this week, marking a shift in the balance between licensed content and that commissioned by the service itself. The streaming service was already "one-third to halfway" toward reaching this target, Wells said, as part of a "multiyear transition and evolution toward more of our own content."

It's cheaper to produce quality shows now

Netflix has become the home of a number of acclaimed originals, produced either by the company itself (as in the case of the Emmy-winning Master of None), co-produced with other studios, or — as in the case with Cary Fukunaga's Beasts of No Nation — acquired after production wrapped up. Wells said Netflix would continue this approach to reach its half-original aim, with the decreasing cost of production and the increasing number of bidders in the streaming market making it cheaper to take chances on shows and movies. "You have supply and demand settling out," Wells said. "We don't necessarily have to have home runs. We can also live with singles, doubles and triples especially commensurate with their cost."

The implication is that Netflix would reach its 50/50 split by producing and buying up more originals, but the company may also even the odds by licensing fewer shows and movies. Ted Sarandos, Netflix's CEO, said at the start of the year that Netflix would release 600 hours of originals in 2016 — up from the 450 hours it put out last year, but not yet enough to fill up 50 percent of its catalog unless it scaled back on content picked up from other networks and studios. Unlike licensed shows, Netflix's originals can be kept exclusive to the service, differentiating it from its competitors and driving people to sign up for subscriptions. Already, Wells says between a third and half of lapsed subscribers to the service return eventually.