8 ms·

Netflix was forced into this. For a while (I no longer look at the data) content costs were increasing at 8-10% per year which is unsustainable for distributors

Netflix was forced into this. For a while (I no longer look at the data) content costs were increasing at 8-10% per year which is unsustainable for distributors. The CEO of DISH once suggested on an earnings call that there should be anti trust inquiries into content pricing. Additionally, Netflix's international growth was hampered by their inability to efficiently negotiate international distribution rights.

snarf21 10y ago
Right, this is the whole end game. They own the content so they can sell it forever to everyone and their library only grows. The Studios and traditional movie powers saw all the interest and decided to squeeze out as much juice as they can. I wouldn't be surprised to see Netflix and Amazon eventually start releasing their movies to the theaters directly and then they later add it exclusively to their streaming platform.
- ajmurmann 10y ago
  They are already releasing movies to cinemas. Just the exclusive part isn't happening which made cinemas unhappy. I think they mainly release to cinemas to qualify for the Oscars.
  - nojvek 10y ago
    I wonder if I have a hd movie, how much does it cost to put them in the cinemas?
    - vermontdevil 10y ago
      https://drafthouse.com/news/see-your-film-on-the-big-screen-this-year-with-a-special-filmmaker-rental-o https://drafthouse.com/news/see-your-film-on-the-big-screen-... Seems the Drafthouse offers this deal.
- runevault 10y ago
  I don't know who handled distribution but Manchester by the Sea was an Amazon original production that was in theaters but will be part of Prime Free streaming in a few months.
  - drather19 10y ago
    I think you have that backwards.. Manchester by the Sea distribution rights were picked up by Amazon (for ~$10M at Sundance last year). I don't believe they were involved at all in the production.
mtgx 10y ago
TV networks were also retracting their content from Netflix when they started seeing that it could one day replace them. It's good that Netflix managed to get big enough to publish so many shows and soon movies, because otherwise it would've probably started to go downhill.
mattferderer 10y ago
Business 101 suggests never getting your business in a situation like that though.
- fullshark 10y ago
  They are a distributor, how do they avoid getting into that situation if not by producing their own content?
  - mattferderer 10y ago
    I'm by no means an expert on distribution tactics or arguing that I know more than Reed Hastings. I'm just stating if you're in that position you can get in trouble quick. To answer your question though, I would suggest making it so that the producers need you to do their distribution because you can do it far better than they could. Apple's app store might be a good example of this for the time being.
    - fullshark 10y ago
      I think they smartly took advantage of Hollywood undervaluing the streaming market early on and built an entirely new market segment on the backs of their content. That wasn't sustainable. Hollywood realized (too late) that they created a monster and started shaking them down. Netflix's only real option was to produce their own content to avoid being under Hollywood's thumb. I think Netflix made some mistakes on their journey (that whole "we're splitting our streaming/dvd business in two to help the consumer" messaging was particularly stupid) but their transition into original programming seems necessary to me, and it's paying off. As a subscriber, I wish Netflix was as good as it was 5 years ago before Hollywood wised up, but given Hollywood did wise up not sure I can recommend a better strategy for Netflix than what they've been doing even with the benefit of hindsight (my only real criticism is they seem to focus on big prestige shows instead of cheap comfort TV like reality shows.)
      - verisimilidude 10y ago
adrianN 10y ago
I like that Netflix invests to produce their own shows, but I feel like the end game of this is that Netflix becomes just another studio. I'd like a world where I can legally watch any movie for a small fee better than a world where I have to subscribe to ten different Internet-TV-Stations to get access to their respective content silo.
- dmix 10y ago
  It's not going to be 'just another studio' unless the other studios start making their content easily accessible both: a) online b) internationally Most people in the US have no idea how annoying it is to deal with content restrictions. It sucks to be an internet company in an industry stuck in a pre-internet licencing worldview.
rhino369 10y ago
It's not the distributors fault really. Netflix is not only in direct competition with it's suppliers, but it's actually killing them. Before netflix created its own content, it's shows were all created by cable channels, whose viewers it was taking at a fast rate. Netflix made "rerun" content valuable. The suppliers were right to charge more. If Netflix actually destroys cable, it would have had no suppliers at all. Creating their own content or buying it straight from production companies was always going to be the next step.

snarf21 10y ago

Right, this is the whole end game. They own the content so they can sell it forever to everyone and their library only grows. The Studios and traditional movie powers saw all the interest and decided to squeeze out as much juice as they can. I wouldn't be surprised to see Netflix and Amazon eventually start releasing their movies to the theaters directly and then they later add it exclusively to their streaming platform.

ajmurmann 10y ago
They are already releasing movies to cinemas. Just the exclusive part isn't happening which made cinemas unhappy. I think they mainly release to cinemas to qualify for the Oscars.
- nojvek 10y ago
  I wonder if I have a hd movie, how much does it cost to put them in the cinemas?
  - vermontdevil 10y ago
    https://drafthouse.com/news/see-your-film-on-the-big-screen-this-year-with-a-special-filmmaker-rental-o https://drafthouse.com/news/see-your-film-on-the-big-screen-... Seems the Drafthouse offers this deal.
runevault 10y ago
I don't know who handled distribution but Manchester by the Sea was an Amazon original production that was in theaters but will be part of Prime Free streaming in a few months.
- drather19 10y ago
  I think you have that backwards.. Manchester by the Sea distribution rights were picked up by Amazon (for ~$10M at Sundance last year). I don't believe they were involved at all in the production.

mtgx 10y ago

TV networks were also retracting their content from Netflix when they started seeing that it could one day replace them. It's good that Netflix managed to get big enough to publish so many shows and soon movies, because otherwise it would've probably started to go downhill.

mattferderer 10y ago

Business 101 suggests never getting your business in a situation like that though.

fullshark 10y ago
They are a distributor, how do they avoid getting into that situation if not by producing their own content?
- mattferderer 10y ago
  I'm by no means an expert on distribution tactics or arguing that I know more than Reed Hastings. I'm just stating if you're in that position you can get in trouble quick. To answer your question though, I would suggest making it so that the producers need you to do their distribution because you can do it far better than they could. Apple's app store might be a good example of this for the time being.
  - fullshark 10y ago
    I think they smartly took advantage of Hollywood undervaluing the streaming market early on and built an entirely new market segment on the backs of their content. That wasn't sustainable. Hollywood realized (too late) that they created a monster and started shaking them down. Netflix's only real option was to produce their own content to avoid being under Hollywood's thumb. I think Netflix made some mistakes on their journey (that whole "we're splitting our streaming/dvd business in two to help the consumer" messaging was particularly stupid) but their transition into original programming seems necessary to me, and it's paying off. As a subscriber, I wish Netflix was as good as it was 5 years ago before Hollywood wised up, but given Hollywood did wise up not sure I can recommend a better strategy for Netflix than what they've been doing even with the benefit of hindsight (my only real criticism is they seem to focus on big prestige shows instead of cheap comfort TV like reality shows.)
    - verisimilidude 10y ago

adrianN 10y ago

I like that Netflix invests to produce their own shows, but I feel like the end game of this is that Netflix becomes just another studio. I'd like a world where I can legally watch any movie for a small fee better than a world where I have to subscribe to ten different Internet-TV-Stations to get access to their respective content silo.

dmix 10y ago
It's not going to be 'just another studio' unless the other studios start making their content easily accessible both: a) online b) internationally Most people in the US have no idea how annoying it is to deal with content restrictions. It sucks to be an internet company in an industry stuck in a pre-internet licencing worldview.

rhino369 10y ago

It's not the distributors fault really. Netflix is not only in direct competition with it's suppliers, but it's actually killing them. Before netflix created its own content, it's shows were all created by cable channels, whose viewers it was taking at a fast rate. Netflix made "rerun" content valuable. The suppliers were right to charge more. If Netflix actually destroys cable, it would have had no suppliers at all. Creating their own content or buying it straight from production companies was always going to be the next step.