The war for online video streaming services is on. A recent study revealed that 60 percent of the movies watched through online video-on-demand services are done through Netflix, even as others are strategizing for getting a leg up on the behemoth provider.
Netflix has emerging competition from Amazon, which has steadily been building its video-on-demand library to let customers rent single views of movies for about $4, and Hulu Plus, which expands the free television provider with back seasons of current shows and a stable of movies for a monthly fee. Even Facebook is trying to break the video streaming window, with Warner Bros. offering to rent “The Dark Knight,” among others, for single-view streams.
To try and combat the emerging competition, Netflix has gone on an aggressive spending buy, including a recent deal with CBS that will make many of its shows — including older hits like “Twin Peaks” and “Frasier” — available to stream starting in April. At the same time, some channels like HBO have refused to let their shows hit the stream; subscribers still have to get shows disc by disc in the mail.
Netflix’s solution? Circumvent the competition entirely. In an unprecedented deal for a content distributor, Netflix spent $100 million to outbid HBO for the exclusive rights to stream 26 one-hour episodes of the upcoming series “House of Cards,” directed by David Fincher and starring Kevin Spacey.
In one fell swoop, the company has gone from a provider to a creator, and what better way to net viewers than to guarantee they have to subscribe to you in order to watch content? It’s almost exactly the model that has worked so well for HBO: Draw people in with the movies; get them to stay with the original programming.
And with Netflix making a concerted effort to rapidly expand its library of features and shows available to “watch instantly,” it can reduce the cost of shipping and manufacturing those trademarked red envelopes, shifting its expenses more to securing and renewing licenses and contracts with other studios while funneling other money toward new shows.
On one hand, it’s a genius move and one that asserts Netflix as thinking well above the competition. On the other, it’s now become a wholly different monster and could alienate some studios.
With Netflix’s ability to stream movies and shows based on contracts that must be renewed at fixed intervals, it’s unclear whether the deals that provide users with “Arrested Development,” “The Office” and “That ’70s Show” will be allowed to expire if the respective studios view Netflix as a competitor instead of a distributor.
In that doomsday scenario, the website’s move to make its bin of streaming shows and movies the crown jewel of video-on-demand services would collapse entirely, and Netflix would be stuck with a $100 million bill for “House of Cards.”
With Fincher and Spacey attached, the miniseries will undoubtedly draw hesitant subscribers to the service, but that shouldn’t be Netflix’s concern; the concern is whether or not this move will keep them ahead of Amazon and Hulu.
Regardless, this move demonstrates that video-on-demand services have taken the next step. They’re not just for feeding subscribers what they already love; they’re for creating and providing new, original programming, and that may be the only way to stay ahead.
That’s Entertainment.
More Like This
Head to Head: Is 'Westworld' worth the hype?
By Jenna Schiferl and Brad Dountz | Nov. 30, 2016'13th' challenges racial bias, prison-industrial complex
By Jonathan Franklin | Oct. 24, 2016