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If Netflix is an enemy, why is Hollywood happy to arm it?

ANALYSIS

April 15, 2013|By Joe Flint
  • Netflix Chief Executive Reed Hastings has a big appetite for Hollywood content.
Netflix Chief Executive Reed Hastings has a big appetite for Hollywood… (Associated Press )

A statistic generating a lot of headlines in the last few days came from Netflix Chief Executive Reed Hastings, who posted on the company's Facebook page that over the last three months, the company's customers watched more than 4 billion hours of programming on Netflix.

Media analyst Rich Greenfield then crunched those numbers and declared that if Netflix were a cable channel, it would be the most-watched network around. The suggestion was that this was horrible news for the traditional television business.

That stat seems sexy until you actually think about it and realize that a decade ago, one probably could have said the same thing about Blockbuster Video. Heck, if the sky were a cable channel, it would have the biggest audience.

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To be sure, the entertainment industry has a love-hate relationship with Netflix. Anyone using Netflix isn't watching live TV or going to the movies.

But let's remember what people are doing with Netflix, which is primarily watching old movies and reruns of TV shows. Hollywood is Netflix's biggest supplier of content. If Netflix is the enemy, then why is Hollywood more than happy to arm it?

If the TV industry is so worried about Netflix, it can refuse to sell content to Netflix. That's HBO's approach. It has determined that the money it could make selling content to Netflix is not worth the risk to its own subscription model.

Others aren't as worried. The money Netflix pays for reruns not only can make those programs profitable for the producer, it also can fund future television shows. Perhaps down the road, the companies that do sell to Netflix will rethink that strategy, but it is hard to say no to a buyer with deep pockets and an insatiable appetite.

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Netflix's move into original content is even more good news because it means there is another buyer out there for TV shows. Netflix agreed to pay for 26 episodes of "House of Cards" before any film had been shot. Not too many broadcast or cable networks would make that kind of commitment.

Does Netflix take viewers away from traditional television? Yes. Is Netflix also lining the pockets of the makers of television shows? Yes. To borrow from the classic comic strip "Pogo," when it comes to Netflix, "We have met the enemy and he is us." 

ALSO:

With 'House of Cards,' is it better to binge or nibble?

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Follow Joe Flint on Twitter @JBFlint.

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