September 24, 2015 - 9:00 PM EDT
bloomberg.com
Netflix to Make More Shows of Its Own
Streaming service wants to produce and own more programs
Shift would help company offer same lineup of shows worldwide
Netflix Inc. plans to make its “Originals” more original by shooting several new shows itself, instead of relying on outside studios.
The world’s largest paid video streaming service is considering filming Chelsea Handler’s new talk show at a space it leased last month in Hollywood, said a person familiar with the situation, who asked not to be named because the plans aren’t public. It’s also the studio behind a pair of comedy series announced earlier this year -- “Flaked,” starring Will Arnett, and “Lady Dynamite,” featuring Maria Bamford, the person said.
The move exposes Netflix to new financial risks -- hiring the talent, renting equipment and overseeing budgets -- but could also speed up its drive to offer a uniform service around the world. While the company controls global rights to many of the shows it brands as Netflix Originals, some of its biggest hits are owned by others: Lions Gate Entertainment Corp. produces “Orange Is the New Black,” and Walt Disney Co.’s Marvel unit created “Daredevil.” Netflix’s licenses will lapse at some point, making those series available to cable networks and online rivals.
“Obviously there’s benefits if we produce a show,” Chief Financial Officer David Wells said on the company’s most recent earnings call in July. “If there’s great reach across the world and we can distribute that show and it will be consumed and enjoyed across the world. So there’s tremendous benefits there in terms of just the scale of distributing it.”
Ownership also reduces the reliance on major media companies like 21st Century Fox Inc. and Time Warner Inc. that are reevaluating their relationship with Netflix. Consumers are watching less broadcast and cable TV, and more online, undermining the most important source of revenue for networks whose in-house production arms previously viewed sales of new shows and reruns to Netflix as purely additive.
Fox RivalryFox will change the way it licenses shows to online subscription services, Chief Executive Officer James Murdoch said at an investor conference last week. Murdoch also indicated he sees a bigger role for Netflix rival Hulu, which Fox co-owns with Disney and Comcast Corp.’s NBCUniversal.
“That may mean that we sell less to one and more to another over time,” Murdoch said. “Our thinking is evolving.”
Netflix, based in Los Gatos, California, has been moving deeper into show business ever since it expanded from DVDs-by-mail to create one of the first Web-based subscription streaming services in 2007.
Like its biggest rival, Time Warner’s HBO, it started by licensing TV reruns and movies for home viewing after they left theaters. Its first high-profile Netflix Original, “House of Cards,” made its debut in 2013. That show is owned by Media Rights Capital, the company that made “Ted” and “22 Jump Street.”
Netflix has produced documentaries and comedy specials in-house, and did the same with a couple of less-expensive shows this year, “Wet Hot American Summer: First Day of Camp,” and “Club de Cuervos.” It’s also buying feature films for theatrical and online release.
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