Netflix Plays the Long Game

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Ryan Lawler has a smart take on Netflix's move into original content:


Netflix's bold bid for original programming comes at the same time that various cable networks and distributors have dismissed its ability to disrupt their core businesses. The overwhelming sentiment in Hollywood seems to be that Netflix will get the scraps that no one else wants. "What used to be called 'reruns' on television is now called Netflix," Comcast CEO Brian Roberts told the Wall Street Journal a few weeks ago. Time Warner chief Jeff Bewkes has been equally dismissive in the past, saying that he believes Netflix will be a place for low-value content that networks and studios can't syndicate anywhere else.

By bidding on an original show like House of Cards, Netflix is sending a message to the cable networks and distributors: "If you won't license shows to us, we'll cut our own deals for the shows you want." In the same way that a shrewd end-around with indie studios gave it access to an Oscar-winning movie before anyone one else, Netflix is going to TV producers directly and cutting out the networks they've previously depended on to fund their shows. And, as Kafka points out, that could give it some leverage as it strikes future network deals.

This makes total sense to me--both as a strategic threat, and an actual strategy.  It is obviously in the interest of Netflix, and probably in the interests of consumers, for it to be a one-stop-shop for all the content you might want to download.  The way to do that is either to be so big that they can't afford not to deal with you--or to make the content yourself.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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