Will Netflix (NASDAQ:NFLX) get its own original content? Can Facebook work its way into MLB.com's line up? Does it really matter if Google (NASDAQ:GOOG) spends money to help improve the quality of YouTube's user-generated content? And, does Time Warner Cable's (NYSE: TWC) live streaming to an Apple (NASDAQ:AAPL) iPad really count as TV Everywhere if you can't go anywhere with your iPad?
This has been a great week in the online video industry and, with NAB just around the corner, the rest of the month should be great. Netflix, though--hands down--wins this week's award for Wow.
The company that made a name for itself as a DVD-by-mail business, which has become the second largest subscription entertainment service in the U.S. with more than 20 million subs (just behind Comcast), is now about to break into new territory: original content.
Reports say the company has pretty much sewn up a deal--it's at least reached the "exclusive talks" stage--with Media Rights Capital for political drama House of Cards, a remake of a popular British series. This isn't the typical lower-budget, web-only product, it's the real deal, complete with an A-list star, Kevin Spacey, and director, David Fincher of The Social Network repute. And it comes with a price tage rumored to be near $100 million (although the Wall Street Journal says it'll come in for less than that).
It's a hell of a jump for a technology company, one that is going to change the way it's seen in Hollywood, and how Tinseltown deals with it. Compare it, perhaps to Time Warner's (NYSE:TWX) HBO subsidiary that started out its life as a repository for on-demand movies on cable. Its original content offerings has transformed it and made it a part of Hollywood instead of a vendor or service to Hollywood.
The Netflix deal has the same potential... even if this is a one-off designed to send a message to content players like Starz and HBO that there are other options available. The fact that the company is comfortable enough to drop $100 million on the project, meanwhile, without even seeing a pilot also tells you a thing or two about its finances.
As Dan Rayburn points out in a post today, Netflix has seen its streaming costs per movie drop some 50 percent since 2009, down to about 2.5 cents per movie streamed. That means it's going to spend about $50 million to stream movies with third-party CDNs in 2011, Rayburn said.
Which brings us to Facebook, which followed its news from last week about a deal with Warner Bros. to offer Dark Knight on-demand on its site with news this week that it would stream one live spring training game from Major League Baseball clubs every day until the season begins (and it's possible it may continue into the season if the response from consumers is positive). Granted, the initiative is really just a marketing effort by MLB.com to get more subscribers to its $120-a-year service, but it's an interesting test of the online waters.
The Facebook/Major League Baseball tryout and Apple's recent announcement that Apple TV will offer live major league baseball and NBA basketball games are potential game changers of a different sort. Both tread on the previously sacrosanct ground that belonged to traditional broadcast and pay-TV operators: live sports, the stuff those guys hang their hats-and their profits on.
Nielsen, for example, said that in 2010, eight of the top 10 prime time broadcasts were sporting events. Now, don't go apoplectic on me, I'm not suggesting the Super Bowl will be streamed live-exclusively-next year, but these recent deals do put a little dent in the armor programmers like ESPN have used to deny they're worried about cord cutting. Oops, there's that pesky phrase again.-Jim