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A Company in Peril

netflix-logo-close/bgr.comRemember when Netflix was under fire for falling stock prices? It seemed that the movie-streaming giant had hit a wall, leaving its millions of subscribers at the will of up-and-coming competitors. Investors panicked as the press published pessimistic outlooks, claiming Netflix must change something. For example, Jason Gallagher of YAHOO! news stated, “Only a major acquisition or innovation can save the company from being swallowed up in a storm of streaming options, and time will tell which direction it is going to go.” That was back in the spring of 2012, but what about now? Turns out Netflix is still around, and doing quite well.

Original Series: Big Move For Netflix

So how well is Netflix doing? According to The Hollywood Reporter, its stock has grown 445 percent in just a year. But stocks aren’t the only thing gaining momentum, as the company’s revenue increased from $905 million to $1.106 billion. Why the immense success, when just a year earlier major publications were foreseeing its demise? The answer is original series, which aren’t just any original series, but critically-acclaimed sensations. Spanning many genres, Netflix has gained an incredible amount of new subscribers thanks to excellent original shows, such as House of Cards and Hemlock Grove. Despite its lack of star power, the streaming site’s most popular show, Orange Is the New Black has gained a huge following thanks to its positive feedback.  Also, Netflix gained much attention by releasing the highly anticipated new season of the cult hit Arrested Development. Check out this list of ten Original shows to watch. According to Variety, 1.29 million new subscribers were added in just three months. With those kinds of numbers, its no surprise Netflix plans on doubling its Original Programming budget for 2014. In addition to doubling, Andrew Wallenstein of Variety reports “the streaming service announced a significant shift in its accounting practices regarding original programming that will see it accelerate spending on series like “House of Cards.””


Are Movies Next?

There’s no denying the success Netflix has had in DVD Rentals, streaming, and now original series, so why stop there? After delivering a keynote address at the Film Independent Forum in Los Angeles, Netflix Chief Content Officer, Ted Sarandos made it clear that the company is considering releasing original movies. In an article on Doddle, James DeRuvo stated “Sarandos says that there are far more buyers out there, who want to buy outside the box, than there are sellers who want to sell it. He cites the film Life of Pi, which saw more viewers in 2D on Netflix, than did in 3D in the theaters.”

In other words, there’s huge potential for Netflix to compete in an industry struggling to hold on to its audience. As the article explains, its biggest frustration is with the theaters, not Hollywood studios. It will be interesting to see how the company plans on creating a formula for exhibiting its movies, if it decides to enter such a market, as well as what types of films it plans on making and how large its movie budgets will be.

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CAA Agent Reveals Netflix Film Budget for Television Series, Scripted Shows Budgets

In a UCLA Symposium on entertainment law a CAA literary agent revealed the programming costs for Netfilx, the movie and television streaming service, on original series.  He stated that the film budget for the their shows had the lowest cost at $3.8 million and that ‘House of Cards’ started at $4.5 million per episode before EP David Fincher escalated it above the figure.

The agent advised that the reason they pay such large amounts is that they acquire tv worldwide rights for four years.  He went on to cite the television budget levels for other networks and advised XBox was getting into the game as well as Amazon.

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Netflix House of Card film budget discussed