Why is Netflix acquiring rights to exclusive original programming (“House of Cards”)?

My answer on Quora

[Privatize Content]
Netflix has been at the vanguard of the streaming video movement.  When Netflix decided to offer video streaming in 2008, there was no need for exclusive content.  Today, competition from the likes of Amazon (remember that Netflix video streaming runs on Amazon Web Services) and Facebook (exclusive deal to stream Warner Bros.’ ‘The Dark Knight’) have created a new strategy for companies – content privatization.   When you can’t or want to compete on price, you compete on content.  Netflix acquired licensing fees from the studios at incredibly cheap prices.  To put it into perspective, Netflix acquired the rights to license from Starz for 1/20th the price that HBO would have paid.  These acquisitions are set to expire in/around 2012.  Soon, Netflix will be forced to increase prices or acquire new subscribers to offset the increase in acquisition prices or start making their own content.  House of Cards is a focus on the latter.

 

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