Is Netflix Splashing Too Much Cash On Streaming Rights?
With the news that Netflix have agreed a deal to stream all seasons of AMC hit drama, “Mad Men” starting July to US viewers, and is said to be paying $750,000-$900,000 for every episode in the deal with Lionsgate. But can the streaming giant afford to keep spending?
Can Netflix keep splashing the cash?
So nearly $1 million per episode for streaming rights? That figure would be pretty huge on cable or satellite where the subscriber and advertising revenue could justify the expense. But Netflix have paid serious bucks for a show that although critically acclaimed, has viewing figures of 3.3 million which is not so great.
The content deals are coming thick and fast for Netflix. Just last week, Netflix struck an extended deal with Twentieth Century Fox, to stream hits shows such as Glee and Sons of Anarchy to the Watch Instantly streaming service. This comes soon after a deal with Paramount Pictures for first run movie streaming in Canada.
Add another $100 million for a Miramax deal to stream it’s indie movies and the cost keeps mounting. As the content providers see Netflix as more of a threat, from Showtime removing original programming from Netflix, to Starz who are delaying streaming to Netflix for 90 days. Netflix have even taken to produce their own tv show, “House of Cards” starring Kevin Spacey to stop the content drying up.
The big problem for Netflix is that the content providers are starting to compete with Netflix rather than be a provider. In response to this growing problem, Netflix are securing multi-year, big buck deals. However, some think that Netflix are spending more than they can afford. Their business is becoming like a house built on sand that will ultimately topple. Netflix rely on everyone else for their business infrastructure, from the content to using the Amazon servers for streaming.
If more providers take away content, subscribers will move with it. The choice for streaming services is growing and Netflix for all their success up till now, may have taken a gamble that they will ultimately lose.
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NFLX is on the verge of total implosion:
http://nflxinpictures.blogspot.com
CFO quit in Dec after selling $40M in stock.
VP of Investor Relations quit last week.
Earnings announcement delayed to 4/25.
Could it be that our 1st commenter John is shorting Netflix? Just askin’.
In all the coverage of Netflix’ purchase of the streaming rights to Mad Men, I’ve yet to learn whether the deal is exclusive, at least for a number of years. If so, that would make the deal somewhat more tenable.
But Netflix is spending so much for content, that I expect to see some advertising start to crop up. Viewers would never tolerate ads within TV shows and movies – and I’m sure the executives at Netflix know this – but they would tolerate a mandatory 1 or 2 minutes before each feature, especially if it’s the sort that movie-goers are used to, e.g., coming attractions of in-theater movies. Plus, there might be ads on the website, tied in to featured movies & TV shows.
[...] streaming service. The viewers gobble it up, but Netflix can only get quality content if they pay big bucks. They have been very successful with online offerings, that are mainly re run TV shows that have [...]