Netflix seals ‘House of Cards’ deal

Netcaster licenses 26 episodes of Kevin Spacey starrer

Netflix made its unprecedented bid to get first-run content because TV networks like HBO and Showtime were holding back the kind of content that did well on the streaming service.

Company’s decision to acquire “House of Cards” prompted by the fact that the heavily serialized dramas that do so well on Netflix were hard to come by especially from the pay-TV networks that are becoming the company’s biggest rivals. HBO has decided not to sell Netflix any streaming rights, according to Ted Sarandos, chief content officer of Netflix, and Showtime was waiting several seasons to license episodes.

“It remains my first desire to license great off-network content as much as it is available,” said Sarandos in an interview with Variety. “But if we can’t come to terms with traditional season-after model, that pushes up our appetite to compete with those distributors for that same content.”

Netflix and Media Rights Capital announced Friday they have reached a deal that will bring at least 26 episodes of drama series “House of Cards” to the online streaming service. The remake of the BBC miniseries will star Kevin Spacey; one of its executive producers is David Fincher, who recently collected multiple Oscars for “The Social Network.”

“The fact that a show of this caliber could come to Netflix speaks volumes of the speed of change in this business and how quickly Netflix has become relevant,” said Sarandos.

The deal is being hailed as a gamechanger because a Net-centric service snagged first-run premium programming by out-bidding some of the same TV networks (HBO, AMC) from which it is accustomed to buying streaming rights. Though the deal has been estimated to cost Netflix in the neighborhood of $100 million, sources familiar with the deal say that is a gross overestimate.

Sarandos also emphasized that the deal does not put Netflix in the original programming business because the company doesn’t produce the show or invest in development; those responsibilities remain with MRC, which also holds onto rights for syndication, home video and international sales.

As Sarandos sees it, the company is essentially acquiring rights to content just as it does any other library film or TV show — only in this case the assets don’t exist yet.

Because the conventional TV business and Netflix are so different, Sarandos says he won’t face the pressure to make “Cards” a hit right out of the gate. As long as the show reaches even just mediocre viewing levels on Netflix over the life of its license, there won’t be the traditional expenditures long associated with promoting the program.

“We won’t require massive marketing campaigns that network TV has to do because the nature of the tune-in that drives all of the marketing spend,” he said. “You’ll see marketing out there but we can also use our traditional algorithms to bring attention to the show.”

Netflix utilizes algorithms to drive its recommendation engine, which delivers viewing suggestions to its subscribers based on their previous choices with the service.

“Cards” would premiere in the the latter half of 2012 at the earliest, though what constitutes a “premiere” is a question mark. Netflix hasn’t decided how exactly “Cards” will be scheduled; strategies could range from the conventional weekly episode to distributing multiple hours at a time.

However, there will be a hedge of sorts built into the production schedule for “Cards.” While the pilot won’t be shot until the spring of 2012, there will be a break before subsequent episodes are shot in order to give the producers additional time to craft the series.

Regardless of the expense, Netflix’s commitment to 26 episodes sight unseen had TV-industry tongues wagging, given the difficulties far more established programmers have had in recent years ordering a season’s worth of episodes without spending on a pilot.

In 2008, NBC vowed to skip pilots for scripts the network liked, but that didn’t help the likes of short-lived series like “Kath & Kim.”

Executive producers of “Cards” are Fincher, who will direct the pilot, Josh Donen, Eric Roth, Andrew Davies and Dobbs, as well as Dana Brunetti and Spacey of Trigger Street Prods. The story was developed by Beau Willimon (“The Ides of March”), who will serve as co-executive producer.

“Cards” was originally a novel written by British politican Michael Dobbs. The storylines will be reconfigured to depict American politics.