Plot twist: Netflix (NASDAQ:NFLX) is going shopping. The world's leading premium streaming service is buying Millarworld, the comic book and graphic novel publisher behind Kick-Ass, Reborn, and Kingsman. Terms of the deal aren't being disclosed, but it's being billed as Netflix's first acquisition.
Millarworld is helmed by Mark Millar, the comic book rock star who breathed new life into what is now Disney's (NYSE:DIS) Marvel Avengers franchise before striking out on his own. Netflix plans to mine Millarworld's growing vault of characters to put out movies, series, and kid shows that will stream exclusively through Netflix's global platform.
Content is king
Millarworld doesn't offer the mainstream franchises that Marvel and DC Comics bring to the table, but it also means that this deal probably came a lot cheaper than the $4 billion that Disney shelled out for Marvel in 2009. However, given the booming popularity in Marvel and more recently DC Comics properties that have hit the silver screen, it's easy to see the appeal here. Netflix has put out several Marvel series as exclusive content on its on service, so it knows a thing or two about consumer trends in binge-watching comic book-inspired shows.
There will likely be some awkward alliances already in place that may be restrictive, just as Disney discovered when many of its acquired Marvel franchises were already tethered to rival studios and even theme parks. Kick-Ass, Kick-Ass 2, Kingsman: The Secret Service, and Wanted have all gone Hollywood for Millarworld. However, Netflix obviously knows all of this going into this transaction.
This may not be the last content grab for Netflix. Netflix closed out the second quarter with nearly 104 million subscribers worldwide. There is power in that leverage, affording it the luxury of paying up for exclusive content because it can divide that across its nine-figure audience base.
Netflix will naturally want to mind its appetite. The more content creators it acquires, the more it starts to be seen as a conflict of interest for studios considering licensing their movies and shows through the service. That won't be a problem in the near term. Millarworld's deal isn't going to result in Disney pulling its content from Netflix. However, if Netflix strings together too many deals, it may start to be seen as more of a competitor than a distribution partner. Today's deal is brilliant. Tomorrow's deal may be dangerous.