The Implications Of The New Netflix Streaming Deal

Netflix recently announced a deal to run an original TV series House of Cards on its Internet streaming service. That you don't have to leave your couch to rent a movie has made cable networks and Hollywood studios nervous. NPR's Laura Sydell tells host Liane Hansen what the deal means.

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LIANE HANSEN, host:

This is WEEKEND EDITION from NPR News. I'm Liane Hansen.

Netflix originally built its brand on the notion that you only had to go as far as your mailbox to rent DVDs. Now, you don't even have to leave your couch -and that's making cable networks and Hollywood studios nervous. With more and more of the 20 million Netflix subscribers streaming movies and TV shows, the Showtime and Starz networks have put more limits on streaming their shows.

NPR's Digital Culture correspondent Laura Sydell joins us from San Francisco to help us figure out what's going on with our screens. Hi, Laura.

LAURA SYDELL: Hello, Liane.

HANSEN: First of all, do you get Netflix DVDs in the mail?

SYDELL: You know, I used to but I just switched to now I'm only getting the streaming service. Of course, I never just got it in the mail - at least for the last year - I can get it on my iPad, I can get it on my iPhone. I have a Roku box, which is this box they sell that has Netflix on it and an Amazon service. You can get Netflix on your Xbox, you can get Netflix on your PlayStation 3. I mean, Netflix is kind of all over there.

HANSEN: So, why is this competition for Hollywood?

SYDELL: Hollywood has the content and they don't want to lose control of the content. They're looking at, for example, the music business - iTunes, right? ITunes is basically the go-to place for music and, therefore, Apple has a stranglehold on the music industry.

So, Hollywood doesn't want to let Netflix take over and be, you know, the major source online - the only source online - for content. And there's also, you know, other competition that they're hoping to nurse. For example, Amazon has streaming and downloading and you can get a lot of shows through there.

They just want to make sure there isn't just one service, but there's real competition.

HANSEN: And Hollywood wasn't really thinking much about this before Netflix cut its deals, right?

SYDELL: Yeah. Netflix's earlier deals were actually pretty good, but now what's going on is Hollywood is starting to charge Netflix more. So, for example, Amazon is paying about, oh, 60 percent of revenue from whatever gets downloaded they pay to Hollywood. And Netflix had a much better deal - something like 40 percent. That's going to change, it's got to change. Hollywood's not going to give away its content for free.

HANSEN: Netflix is also trying out producing original programming for the first time. There's a series called "House of Cards" that's going to star Kevin Spacey and produced by David Fincher. This seems like a project traditionally more up the alley of HBO.

SYDELL: Yeah. This has got a lot of people in Hollywood talking. And supposedly, the word is they paid $100 million for this series. And we're talking 26 episodes - they outbid HBO. And I think part of what's going on -first off, HBO hasn't been willing to put its content on Netflix. And, you know, for Netflix, this is becoming a problem, because you indeed had Starz, for example, just said you're going to have to wait 90 days before you can allow people to see our original programming on Netflix. So, that's things like "Spartacus" and "Camelot."

But, you know, then you also had Showtime, which now says, you know, you can't show "Dexter." So, they're going to have to do something to keep people subscribing to Netflix, right? You got to have a reason to subscribe. If all you're getting is old movies and old television shows, you begin to wonder, right?

So, this series, basically, that they have just put together they're hoping is going to increase their subscriptions. They have about 20 million subscribers and growing, say to HBO's 28 million. So, you know, they got to draw you there.

HANSEN: And so everything's converging and nobody wants to get left out.

SYDELL: That's kind of where we are right now. I have to say, as a consumer, it gets confusing. You say I want to watch "The Social Network"; where can I find it, right?

HANSEN: NPR's Laura Sydell in San Francisco. Thank you, Laura.

SYDELL: You're welcome.

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