Lovers of movies like World War Z and The Hunger Games are digesting the awful news this week that Netflix will not refresh its agreement with Epix, the first-class cable channel, whose contract with Netflix put those films (and many of others) on the streaming facility.
While this may be sad for some viewers, it speaks to a marked strategy shift by the former aggregator of tv shows and moviews.
Netflix now offers so much first-rate original programming that it doesn’t think you’ll miss the Epix films.
In the blog post, Netflix Chief Content Officer Ted Sarandos said, “While many of these movies are popular, they are also widely available on cable and other subscription platforms at the same time as they are on Netflix and subject to the same drawn out licensing periods.” (Epix later verified that it had endorsed a contract with Hulu to take these films.) Sarandos pointed to Netflix innovative programming like A Very Murray Christmas, Narcos, and Crouching Tiger, Hidden Dragon: The Green Legend as reasons why subscribers should stick around.
Its move to original content is yet another barrier against a host of streaming TV offerings: You either have Netflix, with its original shows, or you do not.
All of this is related to the continuing narrative in the pay TV industry of cord cutters turning the industry upside down.
Netflix gave a lifeline to many of these cable companies by licensing their long-standing programming and bringing in subscribers—customers whose money is now being used to finance innovative programming that it doesn’t have to reconsider the rights for two years down the line.
For that reason, Netflix is becoming more like a TV channel, but with the additional bonus of controlling its own distribution model: Netflix takes all of the finances its subscribers remit monthly, whereas ordinary television channels have to handle complex cable organization deals.
Sarandos's remark hints that Netflix no longer wants to be a replacement for cable. Instead, it wants to be considered as more of an independent content producer—a service customers pay for irrespective of whether or not they have a cable subscription.
In short, its the HBO model except with full control of distribution.