The New Netflix Deal

Netflix Is Said to License ‘Sex and the City’ From HBO
Media companies that had been reluctant to are increasingly offering shows to Netflix, which is pulling further ahead in the streaming wars.

A lot of people seem to want to draw parallels to the past with what Netflix has been doing to the entertainment industry. But the most interesting aspect of the narrative here is that Netflix started by being built on the back of others content (for both DVDs and streaming) and then the studios seemingly woke up to what was happening and started pulling their content, while building out their own streaming services. But now they're going back to licensing the content to Netflix. Why? I'll again quote Willie Sutton, "because that's where the money is."

But also, that's where the eyeballs are.

It's not that Netflix is any less of a threat to their businesses – if anything, it's now far larger and more of a threat – but it's just the admission that they've lost this particular battle. The studios have woken up to the reality of the situation: none of their streaming services are ever going to be larger than Netflix.1 It is now the table stakes service that everyone (more or less) is going to have, and the others will battle for being one of the "others". And with the Sex and the City move, Warner Bros. Discovery seems to be trying to leverage the Netflix audience to convert those who watch their catalog of the series to eventually want to watch the new episodes, which are exclusively on Max (for now). It makes sense.

HBO chairman Casey Bloys draws a parallel to syndication – that is, studios licensing movies to cable and network television after their exclusive windows (theater and rentals) is over:

“We have to be protective of the shows that we have that are successful,” HBO’s chairman, Casey Bloys, said at a news media event in November. “But I’ve worked in television long enough that syndication used to be the pot of gold, that was the brass ring, that meant that your show was going to go on and have a life after its initial run.”

Mr. Bloys noted that several of the titles saw an “uptick” in viewership on Max after they began streaming on Netflix. “Sex and the City,” like all the HBO shows on Netflix, will also continue to be available on Max.

“I don’t think you’re going to see more recent shows anywhere else until years later, which is the syndication model,” Mr. Bloys said in November. “I am comfortable with it, and so far, it seems to be working. But again, everybody’s just experimenting at this point, trying to figure out how much is too much.”

It works on some level, but again, Netflix is just a different beast. They both now do what the studios do – original movies, television – and increasingly do everything in entertainment – sports, gaming, etc. If you fast forward this story several years, you can't help but see a world in which the studios are in a way just production houses for Netflix, which is where the majority of viewers will consume that content.2 And if Netflix giveth, Netflix can taketh away...

1 And kudos for Sony for figuring this out before spending billions of dollars to build their own streaming service.

2 Perhaps only Disney is safe thanks to their unique IP and unique business arms, like theme parks. If I were the other studios, I might think about how best I can differentiate my content beyond just the content itself...