Netflix Licenses Exclusive Content, Competes with Cable Networks

Now, the cable industry has another reason to hate Netflix. Netflix has is now licensing exclusive content. According to Brian Stelter’s “Netflix Gets Into the TV Business”,

“Netflix said on Friday that it had licensed the exclusive rights to ‘House of Cards’, a show that is to be directed by David Fincher, the director of ‘The Social Network’, and to star Kevin Spacey”

This deal means Netflix is competing directly with cable networks.  The benefits of the licensing agreement is exclusivity, availability of the show for consumers at any given time, and more episodes for consumers considering it has been picked up for two seasons. The biggest caveat is the show is in pre-production; the release of the show on Netflix is essentially its test, no pilot. If it is successful, subscribers will be able to consume the show at a faster pace than if it was premiered on a major network, such as HBO, one episode per week.  Ted Sarandos, the chief content officer for Netflix, noted that the on-demand nature of the show gives it a better chance to become successful; the time slot, which plays a critical role in most shows’ success/failure, isn’t relevant because there isn’t a time slot.

I previously wrote about Netflix making enemies in the industry with its rapid success, growth, and inspiring consumers to “cut the cord” with cable. Now, with licensing content, “Netflix is essentially selling itself to Hollywood as an alternative to networks like HBO – and indicating that it is willing to pay high prices for high-quality shows.” Sarandos is not at a loss for words about his company’s success:

“It [the deal] speaks a lot to how quickly this market is emerging and to how quickly Netflix has become a real, legitimate entertainment brand in the eyes of both consumers and content creators”

The show is expected to become available on Netflix in late 2012. Only then will everyone know if the show is a success for the company, by then Netflix will probably have gained millions more subscribers. The most significant aspect of the deal is other production companies might consider Netflix as one of the “networks” to shop shows to.  Netflix is not just able to play along with the cable industry and networks but has essentially pioneered the on-demand industry with content meant for the cable industry.