The fact that Netflix is making an investment in a series (probably a multimillion-per-episode investment) shows that they are positioning themselves to compete with the likes of premium cable networks and other content creators. This will decrease their reliance on paying huge fees for licensing content from studios, which is paramount for the future success of Netflix. As streaming technology becomes more accessible, content creators like HBO are able to launch their own initiatives (like HBO GO) to offer distribution that bypasses the Netflix middleman. Netflix needs a reason other than their infrastructure to be relevant, and original content, if executed well, could be that solution. Netflix is continuing it's audience expansion efforts, and this month announced it hit 1 million new subscribers in the UK. This pipeline to an audience, coupled by a strategy of vertically integrating it's content acquisition, will fortify Netflix against its competitors. The strategy may also convince other companies to follow suit. Youtube has taken a similar approach as they invest in content creators to help maintain their premium original content, and Hulu has made similar premium content partnerships too. More and more tech companies are expanding and transforming into media companies as the barrier for entry for distribution slowly dissolves away. I predict we'll see more tech companies transforming into media companies as content creators realize that direct distribution is easily accessible.
