Online firms modify approach

22 March 2011

NEW YORK: Online companies such as Netflix, Yahoo and AOL are increasing the amount of original video content they produce, challenging traditional broadcasters in the digital arena.

Video-streaming specialist Netflix has partnered with Media Right Capital to part-fund and exclusively host a drama serial to be directed by David Fincher, and starring acclaimed actor Kevin Spacey.

Due to launch in late 2012, the agreement for "House of Cards" has been signed without a pilot, and Netflix is committed to supporting at least 26 episodes, two strategies rarely employed by TV networks.

"I don't look at is a change in our business model, as much as an evolution of our licensing abilities," said Ted Sarandos, Netflix's chief content officer.

"It's not a test. It's a large commitment. If the right properties show up, we'll do more, but we're not under any pressure to do it."

He added: "Our value proposition to consumers is so much more about completeness than freshness. Having the complete season is so much more valuable, in our business model, than having last night's episode."

Another option receiving consideration by Netflix is making four or more instalments available in one batch, thus enabling viewers to engage with material in a different way.

"There's no reason for us to be tied to traditional release models," said Sarandos.

"I don't care if people watch it Wednesday night at 9pm. They can watch it anytime in the life of the license, and it's economically neutral."

Hulu, backed by firms including News Corp, Comcast, NBC Universal and Walt Disney, is similarly unveiling a new offering this month, entitled "The Confession".

Kiefer Sutherland, of hit TV show "24", leads the cast, and the story will be advanced in ten clips lasting between five and seven minutes apiece.

The Digital Broadcasting Group allied with Sutherland to develop "The Confession", and Hulu has picked up the licence.

"It has the potential to prove that an A-level show can originate online," said Chris Young, chief executive of the Digital Broadcasting Group.

Yahoo is also heightening output rates in this area, recently announcing a regular service on its Finance channel called Breakout, to be sponsored by Merrill Edge.

This augments the company's increasingly diverse activities, such as a collaboration with Electus and State Farm on "Ready, Set, Dance!" in 2010, and a further scheme alongside Reveille and Toyota.

"We want to be disruptive," Erin McPherson, Yahoo's head of video programming and originals, said at a conference earlier in March. "My hope is that we get to the point that we're a first window for content."

Les Morgenstein, chief executive of Alloy Entertainment - previously involved in hit series like Gossip Girl, the Vampire Diaries and Roswell - believes the web holds considerable possibilities.

"There are a lot of TV creators who have had success and not ownership," he argued. "And this affords them that."

Elsewhere, AOL has finalised a deal with actress Queen Latifah, who will produce and star in a range of material, primarily hosted on the Blackvoices platform, but carrying a wider aim.

"With Queen Latifah's proven track record to create content that resonates with a broad audience, AOL is excited to ... bring her unique perspective to the digital space," said Tim Armstrong, AOL's ceo.

Data sourced from Wall Street Journal/All Things D; additional content by Warc staff