Will Original Content Save Netflix?
Netflix’s (NASDAQ:NFLX) choice to pursue a range of original programming offerings has presented a new set of challenges, yet the streaming-video provider is moving forward at full steam with its new content model. Its first show, House of Cards, was made available to subscribers on February 1, and the company announced Tuesday that Dreamworks Animation (NASDAQ:DWA) would debut a series for children on the streaming service.
Original programming has noticeable benefits for providers like Netflix and its competitor Amazon (NASDAQ:AMZN), which has not been left behind by the changing streaming paradigm.
For Netflix, original content is a means for the company to hold on to its subscribers. The company’s problems securing movies and television shows from content providers are well-known, so developing its own programming enables Netflix to avoid increasingly expensive licensing costs. The battle to lock in license agreements has intensified as more large competitors have joined the fray; Netflix must now outbid players like Amazon, Apple (NASDAQ:AAPL), and Starz (NASDAQ:STRZA) to acquire content, and that competition has drive up prices.
However, with the recently-inked, expensive content deal with The Walt Disney Company (NYSE:DIS), and Dreamworks’ plan to develop its 3D movie Turbo into a series after the film is released this summer, Netflix will have a strong, family-focused catalog. This will enable the company to draw in new subscribers…