Earlier this week, Netflix made a shocking announcement – they would license a TV show, distributed exclusively to its huge network of subscribers. The show, “House of Cards,” will be executive produced by David Fincher and Kevin Spacey and is based on a 1990s British miniseries of the same name.
There are potential game-changing consequences with this announcement. First, it invites studios and producers to distribute their content solely through digital channels. Other content-providers (iTunes, Hulu, etc.) may offer their customers their own exclusive content.
Secondly, there’s the major questions of advertising and money. How will these shows generate money? Will Fincher, Spacey, and their production companies earn percentages of Netflix subscribers? Perhaps “House of Cards” will have 1-2 title sponsors who’s advertisements will run during the show. Fascinating.
Perhaps even more fascinating is the effect this agreement (and future ones) will have on cable companies. With the advent of content-distribution tools increasing in popularity (Apple TV, Roku, etc.), combined with existing digital content providers (iTunes, Netflix, Hulu Plus, etc.), consumers are moving towards a model where content is consumed selectively. Imagine: rather than paying hundreds of dollars for your monthly cable bill where users receive innumberable channels, customers can pay smaller fees per channel, per event, or per show. We’re already seeing this with Apple’s recent iOS upgrade where Apple TV owners can watch NBA and MLB games without the need of a cable box.
In years past, customers craved as much content as possible for a flat rate (see Comcast, Time Warner, Xfinity, etc.). More and more, the same customers are looking for increased customization and value for their content dollars. Will “House of Cards” continue this trend or serve as an anomaly?