Netflix Decides to Compete with TV Networks


By Diana Anderson and Tom Snyder

Netflix, which streams movies and television programs to its subscribers, is now going into direct competition with the major television and cable networks.

 

Netflix has outbid HBO for rights to a new dramatic TV series, HOUSE OF CARDS.

Netflix committed approximately $100 million for 26 episodes without


even seeing the show’s pilot, which stars Kevin Spacey and is directed by David Fincher, director of THE SOCIAL NETWORK. HOUSE OF CARDS is based on a novel and BBC miniseries about politics. The Spacey-Fincher version, however, is Americanized and set in the U.S.

 

To date, Netflix has streaming rights to over 8,300 movies and 24,000 TV episodes.

 

Shares of the company rose 8 percent to $216.49 last Tuesday, resisting a downward trend. Based on a deal Facebook recently struck with Warner Bros. to stream THE DARK KNIGHT, Goldman Sachs analyst Ingrid Chung predicted that Facebook could become significant competition to Netflix. She wrote last Tuesday that “the demand for video streaming could be big enough to sustain multiple business models and competitors and that these models can co-exist.”

 

That may be so, but Netflix’s decision to create its own could also be the start of a major shakeup in the entertainment industry. Eventually, of course, the larger media conglomerates may merge or buy out companies like Netflix as those companies do more and more business over the Internet.

 

Where that may leave movie theater owners and television providers is anyone’s guess.

- Source:  Hollywood Reporter, 03/16/11.

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