The entertainment industry’s attitude towards Netflix has been growing sour for a while, and in earnings calls yesterday both Time Warner CEO Jeff Bewkes and News Corp COO Chase Carey came out strong on the reason why: the proper valuation of content.
Time Warner, Bewkes said in Seeking Alpha’s transcript, will be increasing what they charge Netflix and Redbox for DVDs, and will also determine whether to lengthen the window for new releases — believing, he says, that “the value that film companies or our company should get for that period of exhibition is considerably higher than what’s there now.”
Meanwhile, Carey referred to the Netflix/Starz deal as being “probably the ultimate example of product being sold beyond cheap,” stating that he felt more comfortable pursuing other syndication options for premium FX programming like Sons of Anarchy.
While the message that studios feel that they aren’t getting proper value for their content is clear, what’s also clear is this: Netflix is now seen as direct competition to other platforms, including cable TV. As Carey said, in regards to FX’s acquisition of second-run content: “I would not be buying reruns, syndication rights to a an expensive piece of programming and letting it go reside on Netflix for 20 million copies up.”
This means that Carey is comfortable with Netflix streaming what he termed “library content,” referring to the complete seasons of shows like Buffy the Vampire Slayer, Arrested Development and The X-Files, shows for whom the syndication glory days are over. But if Netflix wants to run more recent shows, say for example Breaking Bad or Mad Men, it might have to seriously up its rates in order to get exclusive access — a cost that would likely be passed down to the consumer.
The question then becomes — would the average Netflix user accept a significant increase in his or her subscription fee for access to high-level programming? As Ryan pointed out recently, it might well have to, as a lack of quality content is becoming a major complaint about the company’s library. Netflix may have the audience, but as long as studios control the content, the power lies with them.
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