Netflix Buys TV Series Rights, Jumps Into Content Creation Game

Netflix Buys TV Series Rights, Jumps Into Content Creation Game

Netflix has been doing pretty well for itself. They helped put brick-and-mortar video store chains into bankruptcy, and are the leading provider of paid TV and movie rentals–digital and physical. In the last year and a half, they've reportedly lowered their own costs to stream a movie by 50%, which means they've likely got a lot of cash lying around, burning a hole in their collective pocket. Or… at least… they did until recently, when they decided to plunk down $100 Million for the rights to a hot new television series. That's right, Netflix is getting into the content creation game.

Netflix First Original Series

Netflix has chosen pretty well in their first foray into producing, pouncing on a series that nearly all of the entertainment industry expects to be great. Of course, there have been plenty of times when a series was supposed to be great only to turn out miserable.

Netflix Buys TV Series Rights, Jumps Into Content Creation Game

It always starts with pedigree, and this show has it in excess. The series is a remake of the British critical favorite, House of Cards, and has some Hollywood heavyweights involved: Kevin Spacey is attached to star, with Social Network helmer, David Fincher, on board to direct. Spacey is one of the more respected and commanding actors in Hollywood, and there's simply no hotter director than Fincher.

So the show itself makes a ton of sense. You can see why Tinseltown got all worked up over it. But the Netflix part still sounds strange. In many ways, you could compare this to any large company that does not make movies suddenly deciding to make movies. Like Wal-Mart. What does Wal-Mart know about making movies? Probably nothing, which is roughly what Netflix knows about making television shows.

Of course, Netflix already has one key element in place to find success as a content producer: distribution channels. They have millions and millions of customers receiving DVDs in the mail or digital downloads on the computer every day.

Netflix Buys TV Series Rights, Jumps Into Content Creation Game

This is not unlike the move HBO made back a couple decades ago, when they started producing their own series instead of merely showing blockbusters–you probably know how well that ended up working out for them, right? So it's understandable that Netflix wants to give it a try themselves.

Netflix isn't just dipping their toe in the production waters, okay? This isn't a wade-in-and-see kind of thing. They dropped $100 Million and a guaranteed commitment of 2 seasons and 25 episodes (over $3 Million per episode) for a show that doesn't really even exist yet. That's a cannonball into the deep end of the pool. The message to Hollywood is clear: we're here to stay.

Implications for the Future of Netflix

How likely are the major networks and film studios going to be to negotiate with Netflix moving forward if they know that Netflix is now a competitor instead of just a partner? You could argue that they might make things difficult for Netflix–by asking for more money or limiting the content they offer. Of course, Netflix is kind of in a position of authority these days, with not too many legitimate competitors to speak of–studios that want their content in the homes of the 20 million Netflix customers.

You might also wonder if Netflix isn't actually increasing their own bargaining power with this move. If they can produce their own content–and it's quality content in the eyes of viewers and critics alike–then what do they need Hollywood for? Don't want to let us rent your movie? Fine, we'll make our own.

A lot will hinge on how well this show performs. Will Netflix customers watch it? Will they like it? Will there be enough return in PR and viewers to justify the spending on this property? A lot about what Netflix does and does not become will depend on the success or failure of House of Cards. But there's no denying that this is a huge, unexpected move by the rental company into previously untested waters. If it works, it could cause a ripple effect throughout the entertainment industry. If it doesn't, it'll be held up as a cautionary tale for any media company looking to jump into production.

 


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About the Author -
Jeremy Scott is the founder of The Viral Orchard, an Internet marketing firm offering content writing and development services, viral marketing consulting, and SEO services. Jeremy writes constantly, loves online video, and enjoys helping small businesses succeed in any way he can. View All Posts By -

What do you think? ▼
  • BroadcastAssassin

    And THR just reported on how Hulu is getting into the web originals game. As a producer of web only entertainment, I have two immediate thoughts: the first is that it's even easier now for me to convince skeptics that internet delivery is the future of entertainment. The second is that, once again, Netflix is ridiculously ahead of the game, taking the leadership role that the networks don't seem to want or know how to own.

    -Jeff Koenig
    Founder, OMFGeek

  • http://www.gamersdailynews.com Christophor Rick

    It's a brilliant move by Netflix. This is the "get on board or get left behind" moment for the studios. Since some of them were starting to shy away from Netflix, it looks like big Red took it upon themselves to cut out the middleman.

    Why pay someone, who paid someone to make something when you can just pay the creator and skip the middle guy right? It makes perfect sense. Now, instead of HBO or Showtime selling the rights to Netflix…they can sell the rights to HBO or Showtime.

    Now, not only do they then have exclusive rights to streaming (because I'm sure that would be how they form the contract), the broadcaster would be paying them to get the show on their channel. Netflix, turns the tables and becomes the middle man getting money from two sides (subscribers and broadcast rights) instead of paying much higher number for the rights to stream from the broadcaster who is trying to recoup overhead on their purchase of the show's rights.

    I can also see this working like this.

    Production company A has show B. They offer Netflix exclusive streaming rights for X dollars and they then cut a broadcast deal with channel C for X dollars. That would be far trickier as Netflix and the broadcaster would have to hash out a release schedule. Ideally, Netflix would be able to start streaming the show at the same time as it is first aired on the broadcast channel. Then, if say you miss the airing of the show, you can flip over to Netflix and start watching it…even if it's just two hours later. Or, even cooler, if you want to watch it again.

    Really, Netflix should cut a deal with cable companies and in itself become the broadcaster with an actual Netflix channel. Perhaps that's the plan. Be both video-on-demand Internet streaming service and, eventually, have a Netflix channel included in cable TV…or perhaps 2 channels, one for film and one for TV and just start airing all that stuff they are now beginning to buy the rights to.

    They can then effectively cut studios out of their supply chain. Or, perhaps cut certain deals with studios that provide them with both TV and film (we won't air your TV shows on our cable channels if we can air your films on our other cable channel).

    Yes, very wise move indeed Netflix. When I get back to the States I am defo going to be a streaming subscriber :)

    • http://www.gamersdailynews.com Christophor Rick

      Scary when a comment of mine rivals the length of the article ;) It's because Jeremy stole this from me without knowing it :D

  • http://www.facebook.com/profile.php?id=684288969 Roy J Lores

    Problem with Netflix is you are limited to view their content on either a tiny mobile phone screen or a laptop. I'd rather see new episodes on big Plasma/LCD HD screen.

  • http://www.facebook.com/profile.php?id=100002559117338 Paul Mageary

    um xbox wii ps3.

  • תומאס ווארד

    there's also the netlix app for many wifi capable TVs, and My computer monitor is also a 42 inch tv… so yeah…. problem with tiny screens my @ss.

  • cinerose

    I, too, rather watch my movies on a bigger screen. You can watch Netflix on your HD TV.  Just make sure you have a fast internet connection and buy something like a Roku Box which has a netflix app.  The setup on the Roku is pretty intuitive.  I have a Roku and most content looks pretty amazing for streaming.  I use a Clear 3G/4G WiFi hotspot wireless connection connecting via the 4G Wireless network.  Many Blueray players today are also wifi compatible and offer Netflix apps.  Many gaming consoles also offer the Netflix app, but from what I have been hearing the quality isn't as good as Roku.  If you are in the market for a new HDTV, you may want to consider a SmartTV, which comes equipped with a WiFi (read the specs carefully because sometimes it is just wi-fi ready and you have to buy an additional dongle or adapter to hook it up to the Internet).  These SmartTVs also usually come loaded with apps, such as Netflix.  Good luck on your big screen / Netflix endeavors! :)
     

  • cinerose

    I, too, rather watch my movies on a bigger screen. You can watch Netflix on your HD TV.  Just make sure you have a fast internet connection and buy something like a Roku Box which has a netflix app.  The setup on the Roku is pretty intuitive.  I have a Roku and most content looks pretty amazing for streaming.  I use a Clear 3G/4G WiFi hotspot wireless connection connecting via the 4G Wireless network.  Many Blueray players today are also wifi compatible and offer Netflix apps.  Many gaming consoles also offer the Netflix app, but from what I have been hearing the quality isn't as good as Roku.  If you are in the market for a new HDTV, you may want to consider a SmartTV, which comes equipped with a WiFi (read the specs carefully because sometimes it is just wi-fi ready and you have to buy an additional dongle or adapter to hook it up to the Internet).  These SmartTVs also usually come loaded with apps, such as Netflix.  Good luck on your big screen / Netflix endeavors! :)
     

  • cinerose

    I, too, rather watch my movies on a bigger screen. You can watch Netflix on your HD TV.  Just make sure you have a fast internet connection and buy something like a Roku Box which has a netflix app.  The setup on the Roku is pretty intuitive.  I have a Roku and most content looks pretty amazing for streaming.  I use a Clear 3G/4G WiFi hotspot wireless connection connecting via the 4G Wireless network.  Many Blueray players today are also wifi compatible and offer Netflix apps.  Many gaming consoles also offer the Netflix app, but from what I have been hearing the quality isn't as good as Roku.  If you are in the market for a new HDTV, you may want to consider a SmartTV, which comes equipped with a WiFi (read the specs carefully because sometimes it is just wi-fi ready and you have to buy an additional dongle or adapter to hook it up to the Internet).  These SmartTVs also usually come loaded with apps, such as Netflix.  Good luck on your big screen / Netflix endeavors! :) Source: Netflix Buys TV Series Rights, Jumps Into Content Creation Game http://www.reelseo.com/mastered-distribution-netflix-produce-content/#ixzz1qwSHtScv ©2008-2011 ReelSEO.com Online Video Guide

  • cinerose

    I, too, rather watch my movies on a bigger screen. You can watch Netflix on your HD TV.  Just make sure you have a fast internet connection and buy something like a Roku Box which has a netflix app.  The setup on the Roku is pretty intuitive.  I have a Roku and most content looks pretty amazing for streaming.  I use a Clear 3G/4G WiFi hotspot wireless connection connecting via the 4G Wireless network.  Many Blueray players today are also wifi compatible and offer Netflix apps.  Many gaming consoles also offer the Netflix app, but from what I have been hearing the quality isn't as good as Roku.  If you are in the market for a new HDTV, you may want to consider a SmartTV, which comes equipped with a WiFi (read the specs carefully because sometimes it is just wi-fi ready and you have to buy an additional dongle or adapter to hook it up to the Internet).  These SmartTVs also usually come loaded with apps, such as Netflix.  Good luck on your big screen / Netflix endeavors! :) Source: Netflix Buys TV Series Rights, Jumps Into Content Creation Game http://www.reelseo.com/mastered-distribution-netflix-produce-content/#ixzz1qwSHtScv ©2008-2011 ReelSEO.com Online Video Guide. For futher reading see my article on cine-rose.com

  • http://www.yourlocalinstaller.com/ Yazmin12

    They can then effectively cut studios out of their supply chain. Or,
    perhaps cut certain deals with studios that provide them with both TV
    and film (we won't air your TV shows on our cable channels if we can air
    your films on our other cable channel).

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