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Netflix, Inc. (NFLX) Forces Major Cable Strategy Overhaul

netflix inc (NASDAQ: NFLX)

Netflix, Inc. , gets the majority of its content from old seasons of popular TV shows licensed from traditional media firms. Realizing that their relationship with Netflix, could eventually lead them out of business, the media firms are now altering their strategy.

netflix inc (NASDAQ: NFLX)

Media firms changing tactics

Media firms have recently started changing their approach, and are linking more licensing deals with other streaming services such as Hulu, and are giving more episodes on demand using pay-TV distributors, says a report from Bloomberg.

Investors in the media firms are afraid that by signing exclusive deals with Netflix, they are fostering a rival and are risking their existence, says Bloomberg. Such a shift in approach has been highlighted by James Murdoch, owner of 21st Century Fox.

“Certainly the business rules around how we sell to SVOD (subscription video on demand) providers are changing, and our thinking is evolving,” Murdoch said. Fox is now dealing more with Hulu, which allows the former to control the ads. Fox gave Hulu exclusive rights of the shows on one of its cable channels, FX, says Bloomberg.

On the same topic, Time Warner CEO Jeff Bewkes said that his firm sells old shows to the streaming firms without taking members away from the cable-TV. “You don’t want the money that they offer you to replace more money that somebody else used to be able to offer you,” Bewkes said at a recent conference.

Netflix is smarter

There are good chances that Netflix, Inc. is already aware of such a shift, and is focusing more on the original content like the House of Cards and Orange Is the New Black. In a recent letter to the shareholders, Netflix’s Chief Content Officer Ted Sarandos called original content a “very efficient investment,” adding that almost 90% of “Netflix members have engaged with Netflix original content.”

Apart from the original shows, Netflix is also diving into movies. Its first feature film Beasts of No Nation, which has a limited theatrical release in the US, will now be screened in the U.K, says a report from THR. A U.K. art house chain signed a deal with Netflix, bringing the movie to 10 of its venues. The movie will release on Oct. 16

This recent shift in the media firms approach appears in-line to the comments made by Netflix, Inc. CEO Reed Hastings. The CEO recently predicted that in the next 10-20 years all the television will be on the internet.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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