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Netflix Is Becoming Just Another TV Channel
An anonymous reader writes: Netflix revealed in a blog post that it will not renew its contract with Epix, meaning you won't be able to watch movies like The Hunger Games and World War Z through the service anymore. With the increase in cord-cutters and more original content, Netflix is positioning itself to be like any other TV channel (one that owns its own distribution model) and is betting that customers won't miss the Epix content. Chief Content Officer Ted Sarandos says, "While many of these movies are popular, they are also widely available on cable and other subscription platforms at the same time as they are on Netflix and subject to the same drawn out licensing periods."
And that's exactly the case. Netflix's streaming service started out as a last-run content distributor. They could get cheap access to lots of TV shows because the content had already been sold on DVD, sold to first-run syndication, sold to later run syndication (3am on TBS), etc. So selling that content to Netflix for cheap was the final way - the last way - to make money off of it.
However any time you're selling content on a last-run basis, you're also expecting the service provider to either rake in little in the way of income, or at least not overtake higher tier services. Instead what happened was cord cutting, with viewers no long subscribing to cable services, ordering PPV, buying DVDs, etc. This is a great deal for viewers - lots of content for cheap - but it's a poor deal for content owners. The fact that this happened indicated that they undervalued the content they sold Netflix, and that in turn was because they didn't see the value in streaming.
So whether Netflix likes it or not, they're going to be treated as a high tier syndicator due to the amount of revenue they bring in and the number of viewers. And Netflix doesn't charge enough or pay content owners enough to provide all that content that they got for cheap early-on. They either need to pay more or drop the content, so dropping the content they are. That leaves Netflix with little choice but to go the Turner/HBO model and provide original content to hook viewers, along with a mix of syndicated content to fill out their catalog.
As for content owners, they're going to turn to other content distributors who will pay more for it. Hulu, cable companies, etc until revenue sources at each tier match what providers think they can get. Remember, a lot of this stemmed from undervaluing their content in the first place by virtue of underestimating how many people would go to Netflix. They have a general idea of how much their content is worth, via revenue from the pre-Netflix days, so it's only a matter of finding the right mix of distributors to sell to in order to find the right mix of services and customers. There are people out there who will pay more, especially if you balkanize everything so that the viewer pays a larger number of smaller bills (to avoid sticker shock).
Did people read a different article than I did? The linked article says the following:
"We also have some great family films coming your way, including Minions, Hotel Transylvania 2, and Home through arrangements with Sony Pictures Animation, Universal Pictures and DreamWorks Animation. Starting next year, we will be the exclusive US pay TV home of the latest theatrical movies from the The Walt Disney Company, including Pixar, Lucasfilm and Marvel movies. The majority of these films will arrive on Netflix faster than traditional arrangements had previously allowed."
I lose movies like World War Z and Transformers and gain access to the libraries of Disney and Sony? So long, Epix.