Netflix, Inc. (NFLX) Splashes Cash to Make TV Execs Comfortable

Netflix, Inc. (NASDAQ:NFLX)

Netflix, Inc. wants to maintain good terms with the TV firms and is, to that end, persuading them to take it as a friend and not a foe. Whether or not licensing of shows to Netflix makes sense is something that is making media executives and industry analysts increasingly skeptical. So, to pitch itself as a valuable partner in the fast-evolving global TV industry, Netflix is now raising its volume of shows.

netflix inc nflx

Netflix ups shopping budget

Netflix will soon make an announcement of acquiring the rights to “Jane the Virgin”, a CW telenovela about a virgin who ends up getting pregnant accidentally; “Zoo” the CBS thriller on the violent attacks that animals make and “Colony,” a post-apocalyptic drama of USA, says a report from NY Times. Earlier this month, Netflix acquired the exclusive rights for ABC’s hit drama series “How to Get Away with Murder.”

Answering why the networks should sell to Netflix, Ted Sarandos, Netflix’s chief content officer, “We are a big buyer, and these guys are in the business of making and monetizing content.”

Netflix, Inc. aims to build a library of global rights, to ensure that by the end of 2016 its service is available around the world. For this, it is willing to spend big amount of money. In 2016, Netflix expects to spend more than $6bn in cash on the feature films, TV series, stand-up specials, documentaries, and other content. This means that its spending in 2016 will rise by 62% from $3.7bn in 2014, says the report.

Real original content

Apart from acquiring exclusive rights, Netflix is also working to produce new shows completely in-house. The firm might shoot its new Chelsea Handler talk show completely on its own, and probably at the new studio space that it recently leased in Los Angeles, says a report from Bloomberg. The others shows might follow soon.

If we take a step back, and look at how TV industry is traditionally made, we will get an idea of what this could mean for Netflix. Most often, audiences associate a network with a given show, for example, AMC with “Mad Men.” But in reality the network doesn’t make the show. Rather, a separate production firm makes the finished product, which may not be affiliated at all with the broadcast network.

Netflix, Inc. also majorly follows a similar model, making it nothing but a mere distributor or the owner of the rights for a certain period. But by producing its own content, the firm could ensure that the ownership of the titles stays with it.

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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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