Netflix is now officially in the original content business.
The streaming video and DVD subscription service confirmed earlier reports Friday that it had acquired rights to be the first home for "House of Cards," an hourlong political drama series starring Kevin Spacey.
Netflix has ordered 26 episodes of the program, which will debut on its streaming service in late 2012. Steve Swasey, a spokesman for Netflix, said the company might offer multiple episodes at a time for its 20-million-plus subscribers to watch on demand, rather than premiering one per week as the traditional networks do. That would fit the common viewing patterns of many Netflix users, who watch several episodes of a TV series in one sitting.
In the past, Netflix executives have said they were not interested in original production. But Swasey insisted that acquiring rights to "House of Cards," which is based on a 1990 BBC miniseries, was not a shift in strategy. "Netflix is licensing the series, not bearing any of the production costs or creative risks," he said.
The distinction may be a fine one, however, as Netflix could still be out the tens of millions of dollars it is investing in "House of Cards" if the show proves unpopular with consumers. With its current practice of buying previously seen movies and TV shows, Netflix has data to estimate the popularity of content.
"It does help if there is a precedent for content, but this series is a perfect storm of talent and material, so we had a high degree of confidence in it," Swasey said.
Producer Media Rights Capital will have the rights to sell reruns of "House of Cards" to networks after Netflix's period of exclusivity ends, as well as to distribute it overseas and sell DVDs.
Unlike television networks, Netflix won't be spending any money to promote the show. Instead, it will rely entirely on its recommendation technology to suggest "House of Cards" to people who enjoy political dramas. "You won't see billboards or TV ads or banner ads," Swasey said.
The decision to invest in a never-seen program that doesn't even have a pilot suggests that Netflix doesn't believe there's enough other content available at the moment on which to spend its ample budget.
With HBO executives insisting they're not interested in licensing their rights to movies from Warner Bros., Universal Pictures and 20th Century Fox to Netflix, the biggest challenge for Netflix going forward will be renewing its deal with Starz, which licenses films from Walt Disney Studios and Sony Pictures. That agreement ends in 2012 and analyst Tony Wibble of Janney Capital Partners estimates that the annual cost could increase from $30 million to $300 million.