Media Rights Capital

Netflix buys its first original show, starring Kevin Spacey

March 17, 2011: 10:29 AM ET

Reed Hastings' disruption tour continues as Netflix weighs ploughing its profits into an original series. "It's not TV, it's HBO" may soon be "It's not HBO, it's Netflix."

Image representing Netflix as depicted in Crun...

Image via CrunchBase

Update: 24 hours later, it's official. "Netflix has committed to a minimum of 26 episodes," the press release reads, of "House of Cards." That sounds like 2 seasons worth, and it should begin, um, "airing" in late 2012. Kevin Spacey and David Fincher are among the Hollywood machers attached to the project. Read on for the analysis of how this will help not just Netflix, but the TV industry as a whole, even if there's some short-to-medium-term pain in the offing:

You can almost hear the hand wringing these days emanating from the offices of cable and network television honchos as they witness the growth and bold moves by Reed Hastings and his online entertainment company Netflix (NFLX). Hastings' latest move is such a doozy, they might have to start wringing their feet too.

As first reported by Deadline.com, Netflix is close to tying up the distribution rights to House of Cards, an original series directed by Hollywood hotshot David Fincher of The Social Network fame. The number being thrown around is $100 million for two full seasons of the political drama based on a BBC show starring Kevin Spacey. Media Rights Capital is producing the show. Netflix won't comment on the rumor, but that hasn't stopped everyone else.

What is surprising is that people are surprised that Hastings and his chief dealmaker Ted Sarandos would make such a move. As both have made clear, they are in the business of getting as much television, and as many movies as they can to attract as large a subscriber base as they can. All they need to do is have enough compelling fare that people are willing to pay $8 a month for the Netflix streaming service. So far, they have more than 20 million people and counting who have take them up on the offer.

Acquiring House of Cards is just more reason for people to subscribe. And the more people that pay Hastings $8 a month, the more original content he can afford to send Sarandos out bidding for. If HBO (owned by Fortune's parent company Time Warner (TWX) ) won't sell Netflix streaming rights to its blockbuster shows, or any other cable, movie, or network television company puts the squeeze on content, Hastings is making it clear he will go out and get it himself.  If he is willing to pay enough, as he seems to be, and can continue to afford it, content producers will offer their shows all day long.  Assuming the House of Cards deal goes through, we can all stop talking about the distinction between the Web, cable and broadcast – there is none. Netflix is a premium channel at a discount price (which is what the media world finds scary).

Netflix already is television, and with 20 million subscribers it can create hits like any other channel, perhaps more so. If you were a producer would you want top billing on Netflix, or some time slot between two also-ran shows on a cable channel that no one can remember how to find? Netflix without hesitation. And hey, for those "real" television outfits that missed out on House of Cards, maybe, just maybe, if the price is right, Hastings will be willing to syndicate it back to them.

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