This week, while the broadcast networks' prime time schedules are winding down for summer, Netflix (Nasdaq: NFLX) will add a new season of "Arrested Development" to its library.
The show, developed and originally carried by a broadcast network, was revived by Los Gatos, Calif.-based Netflix and arguably represents its highest-profile foray yet into original programming.
The timing is smart. TV seasons are expiring and Hollywood's summer blockbuster run hasn't yet exploded onto screens. Die-hard fans of "Arrested Development" are eager to see new episodes and have been primed with a steady barrage of marketing. Many will probably watch the entire new season in a single holiday weekend, generating more word-of-mouth marketing for the show.
With this built-in fan base, the new "Arrested Development" season is about the closest thing to a sure bet currently found in original online video production. People will watch whether it's any good or not.
Meanwhile, Microsoft (Nasdaq: MSFT) said Tuesday it will finance a new TV series based on its popular Halo video game and has hired Steven Spielberg as the show's executive producer. While this is not quite as sure a bet as Netflix's, Microsoft is smart to see if it can spin some of the Halo franchise's success into another medium.
The most recent version of the game brought in more than $200 million its first day on the market and the franchise has sold more than 50 million units. If a fraction of those fans are interested in seeing what Spielberg will bring to the table, Microsoft could have a hit on its hands. This is essentially the same content-development model championed by media giants such as Disney--creating popular franchises and building new products to go with them.
Over at Amazon (Nasdaq: AMZN), no such sure bet exists. That might explain the company's slightly different approach to original programming development. Rather than order an entire season of a new show, Amazon is in the middle of what amounts to a derby for new comedies and children's shows. This approach is a far riskier bet creatively, as there is no successful franchise to serve as a foundation for these TV series. Financially, though, the risk seems lower.
But what will be the payoff for any of these content gambles? Amazon and Netflix both offer ad-free subscription video on demand. If either has a hit, there will be no immediate sales windfall. An increase in the number of subscribers to Amazon Prime or Netflix could be a decent barometer of success, but other factors will influence those numbers beyond the popularity of original content.
One way to judge the success of these investments is to see whether others follow. In a special report, FierceOnlineVideo editor Mariko Hewer looks at some of the strategies of Netflix, Crackle and AOL On in this area. -- Josh
Read our special report here