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TechWorld's Most Admired Companies

Netflix Continues Its Quest to Become the Future of Television

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Mathew Ingram
Mathew Ingram
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By
Mathew Ingram
Mathew Ingram
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March 2, 2017, 4:34 PM ET

Netflix already dominates the market for streaming old movies and TV shows over the Internet, and it has built up a significant stable of original shows too, like Orange Is the New Black and House of Cards.

But Netflix isn’t stopping there. The company is also expanding aggressively into new genres including comedy, unscripted “reality” shows, and international content.

Over the past year or so, Netflix (NFLX) has been on a sustained spending binge, locking up the rights to a wide range of content as part of a planned $6 billion purchasing plan. In all, the company has said it will either fund, buy, or license hundreds of original shows, TV specials, documentaries, children’s shows, and movies this year alone.

One market where this buying spree is having a significant impact is the comedy market. Many professional standup comedians in the past might have signed big-money deals for comedy specials on HBO or some other cable channel. Now, a host of the top names have signed with Netflix instead, including Louis CK, David Chapelle, and Amy Schumer.

To give some sense of how much Netflix’s deep pockets have affected the existing business: just a few years ago, the average price for a top-tier comedy special would be in the $10-million range, according to Variety magazine. Now it is twice that amount.

When you’re spending a total of $6 billion on movies and TV programs this year the way that Netflix is, dropping $20 million for a special from Amy Schumer or Louis CK is chicken feed. Filming a regular scripted TV show can cost 10 times that much.

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“By the end of this year, unless somebody mounts a tremendous counterattack—which is getting increasingly harder—Netflix will have utter domination of one of five or six genres that exist,” comedy-special producer Brian Volk-Weiss told Variety.

The streaming giant is also pouring money into developing its own unscripted or “reality TV” shows, including one called Ultimate Beastmaster, which is produced by and stars actor Sylvester Stallone. The show pits contestants against an obstacle course, and in a unique twist, it is being filmed six different times for different markets.

Here again, Netflix’s free-spending ways are making a big difference. Since it hired Brandon Riegg from NBC last year to head up its unscripted TV unit, the company has signed a number of top producers. And it has done so in part by offering upfront deals for the full run of a show. By contrast, in many cases, TV networks put up money for a pilot and then decide whether to fund it.

“Netflix isn’t going to demand a year option while they give you $20K and tell you to make a sizzle reel that they expect you to spend $60K putting together, the way too many cable networks do,” veteran TV producer David Lyle told The Hollywood Reporter recently.

Lyle went on to say that “the competition should be scared out of their minds” by the arrival of Netflix on the scene. “These guys are monsters. They’re coming in to play and play hard.”

On top of those moves, Netflix says it is also expanding rapidly into international content as part of a global push it launched last year, when it opened for business in more than 200 countries. According to CEO Reed Hastings, the company has already spent $1.75 billion on licensing foreign shows and creating original content itself or through co-productions.

Hastings said Netflix currently has 90 original shows in development in more than a dozen European languages. He said that the Internet had allowed the company to “reinvent television,” by giving viewers the freedom to watch what they wanted, when they wanted it, and by allowing content producers to reach a global audience more easily than in the past.

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