It isn't a good day for Netflix (NFLX 2.63%) shareholders, but a little game of Marco Polo may brighten their day later this year.
Shares of the leading video service are trading lower in the fallout from the net neutrality decision that was handed down by a federal appeals court yesterday. Analysts aren't exactly in agreement as to what it will mean for Netflix. Wedbush's Michael Pachter feels that the move will increase Netflix's operating costs because Internet service providers can command higher prices for speedy content delivery. Pacific Crest counters that it's not a big deal, because access providers are unlikely to anger their customers by restricting or slowing connections from certain sources.
It's against this potentially fundamentals-altering development that Netflix made a move to beef up its already strong roster of original content.
Marco Polo -- a nine-episode series that was originally being developed for Starz (STRZA) -- will begin filming shortly. It will be available through Netflix across all of its territories later this year. The producers tell Variety that the show is set in China, in a world "replete with astonishing martial arts, sexual intrigue, political skullduggery and spectacular battles."
It's fitting that Starz should pass on the show, leaving Netflix with a potentially magnetic property. It was Starz that walked away from a streaming deal with Netflix two years ago, leaving what seemed to be a huge void in streaming content at the time.
Netflix bounced back, of course. It went on to land plenty of new content licensing deals, and the subscribers kept coming. Netflix now commands an audience of more than 40 million global streaming customers. No one else even comes close. This is the kind of clout that allows it to land a House of Cards, and be the fire starter that can resurrect Arrested Development for a fourth season.
Marco Polo may or may not be a hit. It would be unfortunate if it isn't popular, but in the end, Netflix will just have another original series to follow it up. Netflix can't lose. It's the one that studios and directors craving artistic freedom are now seeking out. It has an unmatched audience, and a validated platform after the critical success of House of Cards. The trickle of original and first-run content is starting to become a deluge.
Net neutrality was all about leveling the playing field in terms of access, but Netflix -- in its own way -- has tipped the scales of content in its own favor.