The same day “House of Cards” opened its doors on Netflix, the House of Grantham announced it was moving to a new neighborhood: Amazon Prime.
As the surprise change in residence for PBS sensation “Downton Abbey” indicated last Friday, a lot of volatility in the subscription VOD real estate market is likely in the coming months.
“Cards” and “Downton” represent the two different kinds of value-added content being brought to bear in the SVOD category, which until fairly recently earned its monthly fees off catalogs heavy on commoditized content.
But no more. “Cards” is just the first of a slate of at least four original series Netflix will deliver to its subs in 2013. Amazon Prime is prepping its own lineup of originals, but it’s unclear when the first will be available; just last week, production arm Amazon Studios greenlit development on a slate of children’s series.And as Amazon’s “Downton” move reflects, there’s a race afoot to lock up exclusivity on series that have already had first-window runs on TV networks. After Netflix paid top dollar to grab “Mad Men” and “Breaking Bad” from AMC, Amazon began to make modest deals to snap up shows of its own. “Downton” easily marks the most aggressive grab it’s made to date.
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Original production and exclusive licensing are different strategies that deliver on the same goal: offering product differentiated from a competitive set that also includes Hulu Plus, the SVOD arm of Hulu.
But Netflix spending $100 million on two 13-episode seasons of “Cards,” an adaptation of a BBC drama with David Fincher as exec producer and Kevin Spacey as star, is a milestone moment for series TV programming. The streaming service released all 13 episodes in one fell swoop Friday, meeting positive reception from critics and chatter aplenty on social media, where the talk ranged from how many episodes viewers were binge-watching to Spacey’s Emmy chances.
There won’t be any immediate answers, however, as to the impact of “Cards” on Netflix, which isn’t expected to divulge any audience measurement stats. Nor does it profess to care how many people watch right off the bat — in stark contrast to the way the TV business is attuned — because the value of the series won’t be realized until far into its run.
CEO Reed Hastings told analysts on a conference call following its surprisingly solid fourth-quarter earnings that Netflix will examine the performance of “Cards,” as well as other new original releases “Hemlock Grove” and “Arrested Development,” in the middle of year to inform its 2014 original programming strategy.
But take it as a sign of confidence that Netflix has already started exploring financing opportunities, signaling intent for a $500 million debt offering last week.
However, it was probably not a coincidence that on the same day “Cards” was released, Amazon looked to be raining on Netflix’s parade by announcing its exclusive hold on “Downton.” While Netflix already has the first season, Prime will add the first and second seasons immediately and add the currently running third in June. At a point to be determined later this year, the first season will disappear from Netflix and remain on Prime, which is also entitled to future seasons of “Downton.”
Netflix and Amazon could be trading punches on the exclusive front all year, and “Downton” is the biggest blow the latter company has landed. Exclusives to date secured by Prime have been series from Warner Bros. including a short-term lease on “West Wing” over the summer and more recently a permanent hold on TNT series “The Closer” and “Falling Skies.”
But Netflix isn’t done on the exclusives front. Last month, the company made an eight-series pact that took “Wing” away from Amazon and also added NBC’s “Revolution.”
Though Hulu Plus doubled its subscription base to over 3 million last year on a mix of originals and exclusives, it’s been relatively quiet of late, with the pending departure of CEO Jason Kilar hanging a cloud of uncertainty over its strategic direction.