Netflix Gets Into The Original Content Game, Buys Upcoming Show For A Rumored $100m
Netflix got its start as the red-envelope movie rental service, later turning into the video streaming authority (bankrupting Blockbuster in the process), and now may be making yet another major move: bankrolling original content.
Context & Ripple Effects
Netflix arrives at this move on the back of a confirmed run: its streaming shift drove rival Blockbuster into bankruptcy, subscribers hit 20 million — up from 12 million a year earlier — and the stock has tripled over the past year. Alongside a January Facebook integration and rising tension with Hollywood film executives, the company has been repositioning from DVD-by-mail vendor into a distribution power.
The reported step — bankrolling an upcoming show for a rumored $100m, unconfirmed by either party — is the first sign Netflix intends to own content rather than merely license it. Silicon Alley Insider framed the pickup the same day as the opening of an 'assault' on the cable industry: exclusivity is the lever a pure distributor lacks, and original programming is how it gets one.
First-order effects
- Netflix gains exclusive programming no rival service or cable network can carry, converting its 20-million-subscriber base into leverage over both Hollywood suppliers and pay-TV competitors.
- The show's producers and attached talent gain a deep-pocketed alternative buyer to broadcast and premium-cable networks, tightening the market for top-tier projects.
Second-order effects
- Cable networks and premium channels must respond on the axis of exclusivity — bidding up talent and rights costs industry-wide as a new competitor with tripled stock value enters originals.
- Broadband carriers already straining under peak-hour streaming traffic face a service whose value now compounds with every exclusive it adds, sharpening the interconnection and pricing fights flagged earlier this month.
Third-order effects
- If the pattern holds, subscription video shifts from reselling studio catalogs to owning its own rights — the same vertical integration path that let Netflix displace Blockbuster now pointed at the cable bundle itself.
The trend: Streaming distributors are climbing the stack from licensed catalogs to owned originals, positioning subscription services as direct substitutes for the pay-TV bundle.