Netflix vs. the networks

Now that Netflix has driven video rental companies out of business, it’s going after the television networks

by Jaime Weinman

Now that Netflix has driven video rental companies out of business, it’s going after the television networks. The online video-streaming company made a deal last week to produce its first original series, outbidding HBO and AMC for the rights to House of Cards, producer-star Kevin Spacey’s remake of an acclaimed British miniseries. Netflix reportedly won the rights to the show, featuring Spacey as an evil politician, by ordering 26 episodes up front without even making a pilot.

If the show succeeds, it could allow Netflix to displace cable TV: it doesn’t have the operating costs associated with a regular network, and instead of scheduling the show, it will simply release the episodes online, for people to sample whenever they want. Executives at Time-Warner, which owns HBO, were rattled enough that one of them ran to the Los Angeles Times denigrating Netflix’s chances: “It’s hard to see how that kind of economics can fit into a service that charges $8 or $10 a month, because the math doesn’t work.” Even if that’s true, Netflix may have no choice but to press ahead with its efforts; with Amazon and other companies starting their own streaming services, it can’t depend on other people’s movies and shows forever.




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