There's a rather interesting article in The Hollywood Reporter that takes an in depth look at Netflix and the impact its fast growing streaming service is having on the industry. One of the points the article touches on is the feasibility of going after content providers like HBO.
"HBO believes in content exclusivity, especially for high-value content," says Jeff Cusson, the channel’s senior VP of corporate affairs. "That’s our rationale for not selling streaming rights to a competing subscription service." HBO does license its shows to iTunes and Amazon, but indicated it has “no intention of making its content available for streaming on Netflix."
Citing a high-placed Time Warner executive, The Hollywood Reporter says Netflix would have to raise the price of its streaming-only service from $7.99 a month to $20 to make it worthwhile. Not so fast, says Ted Sarandos, chief content officer of Netflix.
"They make an incredibly great product that is very expensive to produce," Sarandos says. "But we're buyers and they're sellers, so we'll figure out a deal that makes sense. If we don't, then the service doesn't have everything, and that's OK too."
Some of what Netflix does pay for content rights may surprise you. Starz, one of the first to jump on board, inked a deal some analyst say is in the neighborhood of $30 million (that figures to increase to anywhere from $100 million to $300 million before the end of 2011), while it's believed Netflix is paying $150 million to $200 million for a year's worth of Disney content. You can see how it all starts to add up as Netflix adds more providers to the mix.
So here's the question: How much would you be willing to pay for a streaming subscription, and what would have to be included to justify that ceiling price?