Talking tech since 2003

Just as it has made its way into just about every aspect of our lives, the Internet has become one of the biggest and most promising mechanisms for media over the last few years; especially as residential Internet has reached previously unheard of speeds and technology continues to develop and adapt on a constant basis.  Entertainment media via the Internet is finally getting to the point that it has evolved past videos of cats and amateur home videos on YouTube and has really started to go mainstream to the point that the Internet honestly stands to challenge “traditional” television systems.  This is a point that I made in a previous post where I discussed the Internet media trend that we have already seen and will undoubtedly continue to see over the next couple of years.

When it comes to consumer entertainment on the Internet, Netflix – a company that originally started out as a simple mail-based DVD rental service – has quickly stepped up to the plate by offering a streaming service that allows end-users to view select movies and television shows on their supported computers and entertainment systems.  Having invested billions of dollars to license this content, Netflix now seems to be taking a slightly different and relatively unorthodox venture.

You see, Netflix is currently engaged in a heated bidding war between themselves and television networks HBO and AMC to acquire rights to “House of Cards” – a television show directed by David Fincher; the same man responsible for hits such as the Oscar-winning movie “The Social Network.”  However, instead of trying to acquire it from the broadcasting companies like the company usually does, Netflix is trying to get the exclusive broadcasting rights for the show directly from the producers.  Essentially, Netflix is trying to skip the middleman and become its own broadcaster.

For Netflix, having their own television series would definitely give them a small edge.  From a business perspective, they would not only have the potential to reap in more subscribers because of their exclusive broadcasting rights to the show, but they would also be undercutting the “traditional” networks.  With this in mind, Netflix would eliminate the need to fund their own competition, and if they play their cards right may very well be able to turn a better profit.

However, even though a deal has yet to be made or announced, I honestly do not think that having one series would do great wonders for Netflix.  After all, I doubt that many people would flock to Netflix over their exclusive broadcasting rights to a single show; especially one that has yet to prove itself in front of a large audience.

What honestly excites me though is the fact that Netflix is actually showing a legitimate interest in becoming more of a direct entertainment outlet instead of simply offering dusty and outdated shows.  With this in mind, it wouldn’t surprise me to see Netflix more involved with getting original content for their subscribers.  Sure, they aren’t going to go far with one show, but if Netflix were to acquire a dozen or so shows, there is no doubt in my mind that their success would be phenomenal.

As excited as I am for Netflix’s future, though, I can’t help but wonder what negative impacts their winning rights to series might have.  You see, by engaging in this bidding war – and potentially more like it down the road – Netflix will be competing with their own vendors; the companies that they depend on to negotiate broadcasting rights for the movies and series that they currently offer via stream.  My fear is that these companies will be unhappy with Netflix’s decision to cut them out of the loop, and may decided to raise Netflix’s prices for content, ultimately leaving consumers to flip the bill.  Worse yet, said broadcasters could very well (depending on their contracts with Netflix) flat-out stop selling streaming publication rights altogether, leaving Netflix’s video library empty.

Even with the possible downsides, I don’t think that Netflix could have chosen a much better time to begin its new venture.  Now that the company is pushing their streaming-only plans and receiving competition from newcomers such as Amazon, Netflix absolutely needs to do something to gain an edge.  This might just be it.

Update: The deal has been confirmed, meaning that Netflix is now officially in the business of original content.

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