• by Atul Patel , August 14, 2013

Online publishers have embraced original content because of its power to create loyalty for their channels, keep viewers on their channels longer, encourage social sharing -- and, most importantly, stand out in an era where everyone’s content is the same. Netflix’s “Orange is the New Black,” Amazon’s “Alpha House,” and Hulu’s “The Awesomes” are just a few examples in a growing list of original programming available through streaming platforms.

Original programming is nothing new. Traditional cable networks have understood the value of this concept for a long time, with some huge successes: HBO (“The Sopranos,” “Sex and the City,” and “True Blood”);  Showtime (“Dexter” and “Weeds”); and AMC (“Mad Men”). As streaming publishers mature, it makes sense for them to transfer the successful strategies of traditional television into the digital realm.

Netflix proved that original content has a home in digital, with “House of Cards” earning nine Emmy nominations and paving the way for the launch of several other series, such as  “Hemlock Grove” and  “Orange is the New Black.” But what most people don’t realize is that Netflix isn’t responsible for creating “House of Cards” -- Media Rights Capital (MRC) is. There seems to be a giant industry misconception taking place that streaming publishers are actually creating content. Besides a few shows produced via Amazon’s production company, Amazon Studios, online publishers are just doing what publishers have always done, but they’re just getting the rights to publish the content first. This industry confusion is clearly evidenced in the ReelSEO article quoted below, where Netflix is repeatedly referred to as a “content creator”:

You might also wonder if Netflix isn't actually increasing their own bargaining power with this move. If they can produce their own content--and it's quality content in the eyes of viewers and critics alike--then what do they need Hollywood for? Don't want to let us rent your movie? Fine, we'll make our own.

Why are we acting as if the dynamic has changed? Hollywood isn’t going anywhere. Producers are still very much needed to create the content audiences will watch. This relationship isn’t all that different from the traditional television model. A lot of people probably don’t know that “American Idol” is not original programming created by Fox, but actually by Simon Fuller, owned by Core Media Group, which bought Fuller’s company 19 Entertainment and acquired a majority of share rights for the "Idol" series. In the case of Fox and Netflix, both companies have the rights to air the shows, but they don’t own the content.

Original Programming: Under the Hood

Before “House of Cards” became tied to Netflix, it was a BBC miniseries. Independent studio MRC purchased the rights to “House of Cards” with the intention of creating a new version. After approaching several networks that bid for the content, Netflix came out on top over HBO, Showtime, and AMC. Although Netflix doesn’t have complete exclusivity rights over the original series, it has the rights to the first window of “House of Cards,” meaning MRC has the rights to sell the show to another interested party upon its expiration. Wedbush analyst Michael Pachter said that Netflix “spun the development of original series as if they are the next HBO, and in fact they are merely a licensor of that content.” What people associate as a Netflix-only show could just end up on Amazon Prime or CBS.

This doesn’t mean there aren’t streaming publishers “producing” their own content, which typically involves writers, directors, studios, cast members, etc. Amazon Studios created content using crowd-sourced scripts and projects to create new series, including  “Alpha House,” “Betas,” and Onion News Empire.” But for the most part, the word “original” just means the original channel the content aired on – nothing more.

From the producer’s perspective

There’s no doubt  there’s demand for original content, and this demand will enable producers, especially ones that are well-known, to sell more of their content, whether it’s broadcast, cable, or online only. (Netflix reportedly spent around $45 million to bring the first season of “Hemlock Grove” to its platform, and Hulu will spend around $500 million this year alone on original programming.) Even celebrities are using their names to sell creative, edgy content. Yahoo’s web series “Burning Love,” a spoof on “The Bachelor” and “The Bachelorette” produced by Ben Stiller's production company Red Hour, has a huge following and is going on its third season. In the case of “Burning Love,” it was primarily monetized with advertising, showing that subscription-based services won’t be the only ones licensing content.

So while companies like Netflix and Hulu are getting all the attention for their original programming lineups this year, one thing is clear: we’re going to see more of this happening. Publishers will need more content, and they will continue to rely on producers to create it. Now all we’re waiting for is a system that can make more of these transactions possible.