Netflix Buys TV Series Rights, Jumps Into Content Creation Game

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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.

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.

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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September 2018

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