Simply put, deals with studios to stream their content. Here's the story in a nutshell.
Netflix built its brand on mailing DVDs to subscribers.
They could do so quickly and at relatively low cost because of the placement of their distribution centers. Hence, Blockbuster and other would-be competitors never stood a chance. Netflix did well for their stockholders.
But things in that space evolved quickly. Streaming content quickly became a major part of Netflix's business. Customers liked it, so the company started cutting deals with studios in an attempt to lock out Hulu and others.
A few studios and creators were resistant. This is the reason you cannot stream HBO content (Sopranos, Curb Your Enthusiasm, etc.).
The bigger problem for Netflix: many of the deals they cut a few years back are about to expire. Some of the studios want to stream content via their own networks. As one analyst put it:
You may have noticed that Dexter and Californication are no longer available for streaming. Both were recently pulled by Showtime.
At the same time, Amazon and Hulu are licking their chops, waiting to grab a slice of the streaming pie. That's trouble for Netflix. Their impressive network of distribution centers is not going to help them cut exclusive deals with studios.
Meanwhile, costs are rising. According to the CNN piece linked above...
Netflix is essentially a content aggregator (though this may change in the future). They depend on others' content for their revenue. While mailing DVDs remains a profit center, it's not the future in that space. Netflix needs to stream. And there's a major hurdle coming down the pipe.
That is all. I find this stuff interesting, and thought a few of you would, too.
Netflix built its brand on mailing DVDs to subscribers.
They could do so quickly and at relatively low cost because of the placement of their distribution centers. Hence, Blockbuster and other would-be competitors never stood a chance. Netflix did well for their stockholders.
But things in that space evolved quickly. Streaming content quickly became a major part of Netflix's business. Customers liked it, so the company started cutting deals with studios in an attempt to lock out Hulu and others.
A few studios and creators were resistant. This is the reason you cannot stream HBO content (Sopranos, Curb Your Enthusiasm, etc.).
The bigger problem for Netflix: many of the deals they cut a few years back are about to expire. Some of the studios want to stream content via their own networks. As one analyst put it:
You may have noticed that Dexter and Californication are no longer available for streaming. Both were recently pulled by Showtime.
At the same time, Amazon and Hulu are licking their chops, waiting to grab a slice of the streaming pie. That's trouble for Netflix. Their impressive network of distribution centers is not going to help them cut exclusive deals with studios.
Meanwhile, costs are rising. According to the CNN piece linked above...
Netflix is essentially a content aggregator (though this may change in the future). They depend on others' content for their revenue. While mailing DVDs remains a profit center, it's not the future in that space. Netflix needs to stream. And there's a major hurdle coming down the pipe.
That is all. I find this stuff interesting, and thought a few of you would, too.
