Netflix Gets Into The Original Content Game, Buys Upcoming Show For $100m

http://techcrunch.com/2011/03/15/netflix-gets-into-the-original-content-game-buys-upcoming-show-for-100m/

by joshbert • 15 years ago

83 50 15 years ago

Full Link: http://www.crunchgear.com/2011/03/15/netflix-gets-into-the-o...

They're gonna need a lot more than one show if they're going to try to use original programming as a reason to buy Netflix - 13 episodes a year means weekly for 3 months. They're going to need at least 3 shows to do yearly coverage (they can have breaks in between). If the original programming is the reason you buy Netflix, you won't pay year-round if they don't have year-round programming, you'll just binge on TV six months of the year and cancel for the other six months (and if it's not the reason you're paying for Netflix (and/or upgrading to the next tier or whatever), then it's a waste of their money).

I think two things will help them. The first is that they have no competition in their timeslot, because they'll have no timeslot. The second thing which will help them is that they can break a lot of TV rules in ways even HBO can't - they're less restricted in episode structure or length, for instance.

stanleydrew• 15 years ago

First of all, people don't often cancel once they are getting something. That's why those CD-of-the-month club things worked in the 90s, and book-of-the-month before them.

But I'm not even sure that's important. I don't think the goal here is to directly make money on new subscriptions. This is a massive strategic move.

It sends a signal to content providers that Netflix, if need be, can cut them out of the picture, or at least can make things very expensive for them by bidding up the price of content.

gigawatt2• 15 years ago

I think it's more of a message to Amazon that just streaming a few thousand movies won't be enough to steal the market from them. Amazon is great at breaking into new areas, but I think they would have to think twice about moving into television production, given that it's so far outside their sphere.

ojbyrne2• 15 years ago

I just don't see that working. It's a classic British show dominated by one impressive and charismatic actor and just won't translate to american audiences (it's all talking, no action, everything is implied rather than pushed in your face). "Edge of Darkness" which was a huge Mel Gibson bomb seems like the closest analog.

I highly recommend the original BBC show.

alexqgb2• 15 years ago

By the same token, there's NO WAY a movie about nerds taking depositions for two hours would EVER go anywhere. Ever.

("Humm," says the studio, "is it shot in 3D?" "No, it's shot in brown.")

ojbyrne2• 15 years ago

As a matter of fact, I thought of that movie as I was writing the comment. I could have added "however The Social Network might be the exception that proves the rule."

r00fus• 15 years ago

Can someone explain to me how netflix is in a good position when all major broadband providers are looking at throttling and/or caps?

When all the major ISPs are also selling their own video content, how can Netflix continue to compete?

gnubardt• 15 years ago

They'd have some clout when negotiating with ISPs if they have content the ISP's customers want.

Like Cablevision & Scripps http://www.thewrap.com/tv/article/scripps-cablevision-deal-r...

Or ABC http://www.mediaite.com/online/no-oscars-tonight-for-new-yor...

akronim• 15 years ago

Maybe the long term plan is going vertical, this is the start of owning content production, then later expand into broadband.

dillona• 15 years ago

Please do not let Netflix turn into Comcast

kjksf• 15 years ago

Throttling (to the point that it degrades the quality of online video) or caps will mostly work against ISPs. Sure, netflix uses a lot of bandwidth, bo so does youtube, hulu, TechCrunch TV or Khan Academy. The online video is here and will only grow, so ISPs will have to get on with the program or face backlash from their users.

If ISPs target netflix specifically, there will be PR disaster for them, possible anti-trust investigation from the government and a likely lawsuit.

ISPs are not even a blip on the radar when it comes to selling video content so today Netflix has a clear value proposition: it's a cheap (about 10x cheaper than cable) access to a lot of online video. Netflix's strength is that it's content producer-agnostic. ISPs that are also cable providers can at best offer ability to view via internet their cable programming. Except they're not doing it, it would still be 10x more expensive, they cannot offer anything else that is not part of the cable subscription and probably they can't even offer time-shifting (without re-negotiating contracts with content providers).

warfangle• 15 years ago

Will it really work against the ISPs? I have three choices in my area: 768kbps - 1mbps adsl through Verizon, 15mbps (nominally, typically 3mbps during peak hours) cable through Cablevision, or 3-6mbps high latency Clear 4G.

Not sure how the third option would hold up for streaming netflix - the first definitely would not.

So really, I don't have any choice about it, so I have no leverage. So capping it won't work against my ISP until they cap it below the other options.

tomrod3• 15 years ago

If anyone at Netflix is listening:

BUY FIREFLY AND MAKE NEW EPISODES.

I would gladly play an extra $4 a month (or more) on top of streaming just for access to new weekly/biweekly episodes of that.

MikeCapone• 15 years ago

Now that would get a lot of people's attention! I'd sign up...

chc• 15 years ago

It would be brilliant, but it isn't realistic at the moment. I don't think anyone would want to watch Firefly without Mal and Jayne, and those actors are both under contract (to Castle and Chuck, respectively).

bmelton3• 15 years ago

I've said before, and I'll say again -- those cast members are crucial to what we think of as Firefly, but in reality, it was Joss Whedon who put it all together.

I can't imagine how great it would be to get the original cast and crew back together to continue work on Firefly, but in reality, anything that Joss Whedon considers good enough is likely good enough for me, whether or not it's a spin-off, new series or what have you.

smokinn• 15 years ago

That's probably an expansion path being considered. There are plenty of series that have had big cult success after their cancellation. Firefly is one of them but there's also Arrested Development and, more recently, Better Off Ted for example. Letting others take the risk and capitalizing after proven market viability (basically picking up half of what Fox cancels) could be interesting.

georgekv2• 15 years ago

Stargate Universe & The Sarah Connor Chronicles come to mind for me. Both went under just as they were hitting their stride IMO.

asolove• 15 years ago

Clone High!

ghshephard• 15 years ago

I canceled my Netflix subscription, but I promise to resubscribe at any feasible commercial price and get another 10 new subscribers as well if we could only restart Firefly (under the condition that it's under the creative control of Whedon)

robryan• 15 years ago

While there at it buy Stargate Universe, say what you want about the show but some of the recent eps have been excellent, after the viewers have abandoned it due to some of the first season pacing. Add to that SyFy really losing favor with scifi fans and the move to digital as most of the core audience would be internet savvy.

tomrod3• 15 years ago

I agree, Netflix should just buy SyFy from NBC and revamp it. But where would they show movies akin to Sharktopus?

cookiecaper• 15 years ago

This has the potential to make relations with other content producers a bit stickier, and I'm not sure if that's really good considering that the media industry is terrified of the internet anyway. Netflix has built its business as a supplier -- now they're competing with their vendors.

Qz• 15 years ago

I wonder if doing it this way will be cheaper for them in the long run than trying to buy the digital rights later from the content cabals.

pkadakia• 15 years ago

This is a really interesting move given that Netflix has traditionally tried to push people towards lesser known content. In fact, they don't make that much money on people using Netflix for blockbusters but are much better off with the recommendations. It's a bit odd that they would go for a big name celebrity for their first owned series. This may just be a way to get a foot in the door, and then buy lesser known series for a lot less and push new content in a way we've never seen before.

mildweed• 15 years ago

This is not a part of their core competency. I don't see how this is a good move. If they had bought 10-20 shows, that's a different story...

fourk• 15 years ago

It's just moving them a step closer toward a more vertically integrated business structure. Why start with 20, when you could test the waters with 1?

meterplech• 15 years ago

I don't get it- you are right, this isn't part of their core competency. And, that's why they were smart to only buy one show, with two big names attached to it. They are reducing their risk and seeing if they can play in the content game. If yes, they will likely buy a few more shows and grow that competency.

ankeshk2• 15 years ago

Actually they are not reducing their risk by keeping the number of shows low. Here is why:

Upto 211 degrees, nothing happens. At 212 degrees, water boils.

Similarly, will 1 good show make a lot of people subscribe to Netflix? Even if the show is orgasmic - I doubt it. There is no momentum here. No tipping point. 2 shows won't do it either.

I don't know what the minimum number of new shows is that would get a lot of folks to subscribe. But for myself, I would put it near 12 or so.

If Netflix wanted to reduce their risk, they should have targeted niches that are not so expensive. Mainstream entertainment is not a good idea to start with. Something like History channel or World Travel is.

But going with low risk niches, would not generate so much publicity for them. Would not make the studios and cable companies take notice. Netflix is in a fight with them - and so this is a strategic move to get noticed. Not a risk reduction move.

chopsueyar2• 15 years ago

When did streaming become part of Netflix's core competency?

jasonwocky• 15 years ago

Outright rejecting ideas because they're not part of your core competency is a growth-limiting position to take. Core competencies can get commoditized over time. If you don't skate to the next thing, you wither and die.

ck2• 15 years ago

Is netflix going to start having premium, extra-charge selections?

I won't mind as long as there is no tricking you to select stuff that costs more vs the all-you-can-eat stuff.

jakarta• 15 years ago

Original content is a natural evolution for Netflix. Look at most of the pay-tv channels (HBO, Showtime, now Starz). All of them started as just ways to monetize existing content but realized that original content could make them more money and boost subscribes while reducing churn.

This is why Chris Albrecht (the new CEO at Starz) is pushing for original content. They've tried a couple shows so far (Spartacus, now a show about Camelot) and continue to be moving ever increasingly in that direction.

To those of you who are complaining about it only being one show or that it is going to be too narrow of an audience, sure. But to me this is Netflix just dipping their toes in the original content game.

bmelton3• 15 years ago

This makes sense.

I remember a few years ago Mark Cuban had posted his idea for the 'new' content delivery model -- where he was going to produce original content and own the entire delivery chain from filming to DVD to rentals to theater distribution. His idea was that, in the age of 70+ inch televisions and the advent of the home theater system, many people don't get much bang for the buck in going to crowded, noisy theaters when they get an equal or better experience at home.

In support of that, he was going to film movies that one could, for example, watch at home (for an increased rental fee) on the same day it was being released in theaters.

I was just talking with my wife the other day that this idea has apparently fizzled out, as I haven't heard much about it since then, and that's a damn shame. Hopefully this gets us closer to that objective.

jcl• 15 years ago

Actually, Netflix produced and distributed original content on a limited scale several years ago, through their Red Envelope Entertainment division. Then they shut it down "to avoid competing with their studio partners". :)

jerf• 15 years ago

There is an alternative interpretation of this play, which is that it is primarily a chess move. Demonstrating that they have the capacity to route around the content providers if necessary means that the content provider's negotiation position is thereby weakened. It may be the case that if they even so much as put out a credible series this will easily be worth $100 million to Netflix just in reduced content-provider-negotiation-position. Of course, the content providers will see that as well and react in their own ways (as always), but it's an interesting play.

Netflix Gets Into The Original Content Game, Buys Upcoming Show For $100m

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