This year Amazon and Netflix are buying movie rights – sports next year?

By January 26, 2016Amazon, TV

I wonder if history will look back on Netflix’s 2013 screening of House of Cards as a watershed moment. It was an incredibly brave bet at the time – an investment of $63m in production costs from a company whose previous success had principally come from re-running TV shows that had premiered on traditional TV channels. Netflix was following a formula that had worked well at cable and satellite companies around the world – buy exclusive content to drive subscriptions – but they were the first streaming service to do it at scale.

Fortunately for them, House of Cards was (and is) a massive success, winning 3 Emmy awards, drawing millions of views, and most importantly, is widely perceived as having made a significant contribution to Netflix’s subscriber growth.

On the back of that success Netflix doubled down on their original content strategy and Amazon has gotten in on the game.

I think of these early moves as Netflix and Amazon camping out on the lawn of traditional TV. They stood up and were noticed, and they won some battles, but it wasn’t clear how much of a threat they were to incumbents.

Now I read that Netflix and Amazon are buying up the rights to indie films at the Sundance Festival whilst traditional TV companies are scaling back their investment. If those investments prove successful in increasing their subscriber numbers they will be back bigger and bolder next year following the ‘content begets audiences’ playbook to profitably buy audience share from their competitors. Meanwhile, assuming those competitors don’t want to cede the market they will face the difficult task of rebuilding sufficient confidence to outbid Netflix and Amazon.

Remember also that most cable companies are encumbered with legacy data networks and are struggling financially whilst Netflix and Amazon Prime are growing nicely, and it’s easy to think that the cards are now stacked in favour of the new entrants.

The next logical step is for Netflix and Amazon to move into sports rights. When that happens we will know the battle has entered its final phase.