If studios are going to keep content out of Netflix's
Deadline Hollywood is reporting that the leading movie rental company has outbid AMC and Time Warner's
If it's true, this is pretty substantial. AMC is available in more than 96 million homes. HBO has 28.2 million premium subscribers in this country alone, according to media research firm SNL Kagan. Netflix just started selling $7.99 monthly streaming plans this year, but it's largely seen as a DVD service to its more than 20 million subscribers, with its digital catalog also available at no additional cost.
Netflix is reportedly making a full commitment for 26 episodes across two seasons, a move that Deadline Hollywood estimates will set Netflix back about $100 million.
Is paying $5 per subscriber worth it? Yes. Will Netflix really go it alone here? We'll see.
Some reporters speculate that Netflix will team up with a friendly cable network or broadcaster to offset the costly production expenses. Every episode would then air first on the channel, before moving on to Netflix as its exclusive online provider.
That's a sound strategy, but does Netflix really have to go that far? The company would get the most value from House of Cards by making its subscription service the only way to see Fincher's first television series.
After all, this would be the ultimate bargaining chip in acquiring non-exclusive content. Liberty Starz
HBO can set a couch potato back by as much as $24 a month, on top of a cable or satellite television provider's standard programming charges. HBO has been shedding subscribers lately, but if it can get away with a $10-$24 charge a month with a handful of movies and original shows, why can't Netflix be the next major premium content hub?
There's no other all-you-can-watch digital service even close to Netflix in reach. It's the New York Yankees of streaming video, with a blank check that no one else can match. Can you picture Amazon.com
Shelling out $5 per subscriber for two years of a single show may seem like lunacy for a company that already has tens of thousands of streaming options.
Instead, I think it's brilliant. Netflix's most troubling metric is its 3.8% churn rate. That may seem like a small number, but keep in mind that this is a monthly cancellation rate. Every month, Netflix sheds 3.8% of its subscribers (while attracting new ones, of course). Add that up over the course of an entire year, and one begins to realize how Teflon-coated Netflix's model really is. A series that plays out over two years, exclusively to subscribers, could help more of those wayward customers stick around.
Churn won't be the death of Netflix. The company can make up those transient losses in volume. Subscriber acquisition costs are low, down to a freakishly cheap $11.13 in its latest quarter. But on the flipside, a cancellation is never more than a couple of clicks away. This isn't a hardware-driven premium entertainment service like DirecTV
There is little incentive to join Netflix right now. Its digital catalog relies largely on television shows and older movie titles. Even the new releases that are hitting your local Blockbuster or pay-per-view source aren't likely to be on Netflix, even via DVD. Netflix, and to a lesser extent Redbox, have struck deals with studios for 28 day delays in retail availability.
A hot show, though -- available only on Netflix and served up in installments over a two-year span -- should work wonders for improving the movie service's churn rate.
Netflix won't be seen as a house of cards if it nabs House of Cards -- all for itself.
What do you think of Netflix possibly getting into original programming? Share your thoughts in the comment box below.