The New Networks

AUTHOR'S NOTE: This post was migrated from a former home. Its contents are all but forgotten, but are kept for posterity's sake. 

Yesterday Deadline broke the news that Netflix had possibly outbid network giants like HBO and AMC for the rights to a future original series “House of Cards” executive produced by David Fincher and Kevin Spacey. While the deal hasn’t closed, it could represent a major shift, and a compelling new entrant, into the future of the “Network.”

In the old model for original content, major networks financed productions and received the rights to broadcast and further distribute that content across their network of affiliates. For major television networks, the draw is the first broadcast rights, from which they receive millions in advertising revenue per show. Additionally they have the option to license the content for syndication and distribution across other mediums, such as Hulu, Netflix, and iTunes.

For the new generation of content consumers, the latter mediums are playing a bigger and bigger role in our daily lives. If I don’t watch broadcast television, but I do use Netflix and Hulu to watch content on demand, the networks that own this content become middle-men in the process. 

Until now it seemed that the digital distribution business models couldn’t compete with traditional models to fund the same type of original content, and perhaps Netflix is going all-in with a risky bet, but if they’re successful, it could prove that the old broadcast-first model has a viable competitor.

In the new scenario, broadcasting networks become just another medium over which to distribute content, rather than the guardians of content libraries. Netflix isn’t in the business of broadcasting, but they could obviously sell the rights to the highest bidder, making the content available on Netflix first, but also available through a partner that pays to be the first of the “old” networks to broadcast the show. 

The next question is how far they’d be willing to go licensing the content to other mediums. DVDs and Blu-Rays are logical, but would they ever license to Hulu or iTunes? Logically these other digital distribution services could cannibalize the potential for new Netflix subscriptions, so it’s likely that any original content would be considerably delayed or never released on them. Though at current price points, subscribing to both Hulu Plus and Netflix costs under $20 and likely beats any broadcast cable subscription. 

Assuming the deal goes forward, time will tell if Netflix’s venture will be a viable new model for premium original content. As a digital native, I, for one, am hoping for success, if only for the sake of pushing digital distribution and on-demand content forward, and removing the need for broadcast networks as middle-men.

A year ago I wrote a blog post for a college course on Hulu as the new model for the “Network.” As I said back then, Hulu was developed and continues to be controlled by the traditional broadcast networks, so they’re unlikely to become a direct competitor to the old model, but I also wrote that a new player could adopt this new model and become a viable competitor. It appears that Netflix is that competitor.