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Netflix Looks To Gain Rights To Spacey TV Series

March 17, 2011

Netflix is reportedly looking to purchase the Internet streaming rights to an original television series starring Kevin Spacey, in a move that would put the video streaming service in competition with cable television.

According to online magazine Deadline.com, Netflix outbid HBO and AMC for the rights to stream “House of Cards,” a 26-episode drama directed by David Fincher, who headed last year’s “The Social Network” project.

An anonymous industry source familiar with the negotiations confirmed Netflix’s interest in the TV series.

“They’re sort of taking a page out of the playbook that HBO and Showtime used,” Sam Craig, director of the Entertainment, Media and Technology program at NYU Stern School of Business, told ABC News.

If the deal goes through, it would be an all-new venture for Netflix, which started out as a video subscription service before making the transition to its popular streaming service. Netflix has more than 20,000 titles in its streaming library, but the majority of them are previously aired TV shows and older movies.

“By far, the majority of our delivery and our service is now streaming,” Netflix co-founder Reed Hastings told ABC’s Nightline in January. “Streaming is everything.”

A right-to-stream victory for “House of Cards,” which would allow Netflix to offer it before the series debuts on cable television, would mark Netflix as an even bigger threat to pay-TV channels such as HBO and Starz. Some analysts believe that Netflix, with 20 million-plus subscribers, could be as big as HBO by the end of this year. HBO has about 28 million subscribers.

HBO began its operations in the late 70s and showed only full-length movies. But as other pay-TV competitors began following in HBO’s footsteps, the network made a move into original programming to set itself apart from its rivals.

Now Netflix is looking to set itself apart from its rivals in much the same way as HBO. While it dominates the streaming market, delivering 3 out of every 5 movies in the first two months of the new year according to NPD group, a number of competitors have begun offering their own streaming services, including Amazon Prime and Hulu’s premium service.

“Netflix has sort of gone to the place where streaming and delivery of traditional DVD’s is pretty much a commodity and they’re getting a lot of competition. So I think it’s essential that they develop distinctive content,” said Craig.

According to Deadline.com, Netflix has committed to streaming two seasons of “House of Cards” at a cost of more than $100 million. If the figures are correct, it would be an unconventional move for an age-old Hollywood practice that normally requires a pilot episode to air before committing to a series.

Bob Thompson, a professor of popular culture at Syracuse University, said “House of Cards” has some serious potential to become a milestone for a streaming service that is still in its infancy. It could easily be compared to “Amos “Ëœn’ Andy,” which helped popularize radio in the 1920s, and Milton Berle’s “Texaco Star Theater” that drove television sales in the 1950s.

“I suspect that great series are eventually going to be distributed by these alternate systems,” Thompson told ABC, adding that streaming original programming is likely to be an inevitable move. “Whether ‘House of Cards’ is really going to be the one that makes the breakthrough, we’ll have to see how good it is.”

Netflix has become more of a major inconvenience for long-established TV services because households are increasingly reducing or canceling their cable TV subscriptions as they find other ways to get their daily dose of video viewing, such as streaming over high-speed Internet.

HBO has in the past refused to sell streaming rights of its original programming to Netflix because it felt the extra money from licensing fees wouldn’t offset the cost of helping a rival company.

Netflix’s biggest streaming deal to date, was last year’s agreement to pay nearly $1 billion in a five-year deal for the first rights to show movies and television shows from pay-TV channel Epix, which is jointly owned by Viacom Inc., Metro-Goldwyn-Mayer Inc. and Lions Gate Entertainment Corp.

Netflix spent more than $400 million on Internet streaming rights last year, six times what it had spent in 2009.

Media Rights Capital II LP is the production company backing the “House of Cards” series.

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