Netflix (NASDAQ:NFLX) just signed an output deal with David Benioff and Dan Weiss, the showrunners behind HBO's Game of Thrones. The streaming leader paid about $200 million this week for the multiyear film and television output deal, according to The Hollywood Reporter. That's before it spends any money on producing whatever ideas they come up with for movies or series.

Netflix outbid Amazon (NASDAQ:AMZN) and Disney (NYSE:DIS) for the duo's creative prowess. Amazon was looking for them to man its Lord of the Rings series, while Disney was hoping they'd work on series for FX or Disney+ after completing their work on the next Star Wars trilogy.

The Benioff and Weiss agreement is just the latest in a series of deals Netflix has made directly with creators. It signed screenwriter/producers Ryan Murphy in 2018 and Shonda Rhimes the year before. It's had a deal in place with actor/comedian/screenwriter/producer Adam Sandler since 2014. Owning the exclusive rights to these creators' future outputs can be a massive competitive advantage in attracting new subscribers as streaming competition increases.

The entrance to Netflix's LA offices.

Image source: Netflix.

Only the best

Netflix content chief Ted Sarandos explained the company's strategy around signing showrunner deals during the company's second-quarter earnings call last year. "People like Shonda [Rhimes] and Ryan [Murphy] and Jenji [Kohan] and Jason [Bateman], they have a brand and they care about the brand and they want to create in that brand and they want to create a lot," he said. "We can give them an infrastructure to do that at Netflix because we have a great history of finding and connecting an audience for all those different shows."

Benioff and Weiss have a brand as well. They create epic stories and worlds like in Game of Thrones, which is why Disney wanted them for Star Wars and why Amazon thought they'd be good for its Lord of the Rings plans. And if Emmy nominations are anything to go by, they're really good at it.

That said, Benioff and Weiss aren't a sure bet. Unlike other big-name creators Netflix has signed, they pretty much only have one success to their names. Their other pitch to HBO for an alternative reality series where the Confederacy successfully secedes after the U.S. Civil War was met with immense backlash from both the public and critics. It appears HBO will shelve that show following the duo's departure from the company.

Sarandos mentioned one of the qualities he looks for in these deals are creators with a prolific output. Benioff and Weiss haven't shown they can be prolific like Rhimes, Murphy, and Sandler, but Netflix may be able to help get more of their ideas off the ground. After all, it spends more on content than any other current entertainment content provider.

A big bet

Netflix is committing to spend a lot of money with the Benioff and Weiss deal. The company isn't shelling out $200 million to retain them just to spend a few million to produce their ideas. Their ideas will likely necessitate big-budget productions.

Interestingly, earlier this year Netflix reportedly shifted its content priorities to focus on adding and retaining subscribers, according to The Information. If it's going to spend big on a series or film, it wants to be relatively certain it'll result in a commensurate number of net subscriber additions.

It's not clear the cachet Benioff and Weiss bring to Netflix is enough to get consumers to subscribe to the streaming service. People would certainly sign up for HBO just to watch Game of Thrones, but it's not a clear indication consumers will exhibit similar behavior for the duo's next project.

Nonetheless, Netflix needs to find a new tentpole series after releasing the final season of Orange Is the New Black. It's placing its bet on Benioff and Weiss to produce one that will get consumers to sign up for Netflix or stay subscribed after they binge OITNB for the umpteenth time.

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