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Posted at 02:07 PM ET, 03/18/2011

Netflix goes up against networks, buys first rights to Kevin Spacey series

Netflix said Friday it bought exclusive rights to the television show “House of Cards,” starring Kevin Spacey, making its surest step yet into the entertainment industry and against television networks.

The Los Gatos online streaming video company, with 20 million members, said in a blog post that starting in late 2012 it will begin showing 26 episodes of the drama, produced by “Social Network” director David Fincher. The company did not provide financial details of the deal.

It is the company’s first purchase of first-run rights to a television show and it said it will look for more exclusive licensing opportunities.

And that puts it in direct competition with networks such as Showtime and ABC — a move that the firm acknowledges has risks. But analysts say Netflix’s future depends on big content deals that would make the streaming service a must-see platform to get shows and movies first.

The cable, television and movie industry have closed watched Netflix as a threat and potential partner. The company, which provides an online platform to watch streaming Internet videos, is soon expected to pass the nation’s biggest cable company, Comcast, for subscribers, analysts say.

But many have doubted the company’s ability to maintain its lead in online video streaming, as cable firms and networks launch their own online efforts. Its move to buy exclusive shows puts its in direct competition with television networks such as Showtime and ABC. And the company acknowledges it moves into a new business model by doing so.

“ ‘House of Cards’ represents a slightly more risky approach; while we aren’t producing the show and don’t own it, we are agreeing to license it before it is successfully produced,” Ted Sarandos, Netflix Chief Content Officer, wrote in the blog.

Typically, movies and television shows come last to Netflix. Hollywood usually runs movies and television show in theaters and on cable networks first. They then sell DVDs and sell licenses to on-demand services by cable and satellite firms. CEOs such as Comcast’s Brian Roberts and Time Warner’s Jeff Bewkes have scoffed at the attention on Netflix, saying the platform was good for television re-runs alone.

But Sarandos said the company saw opportunity in leasing first-run rights to the coming one-hour drama, noting it has found success in showing reruns of similar shows such as “Heroes” and “Weeds.” He said HBO is the only network that hasn’t licensed re-runs of its shows to Netflix.

“With David Fincher’s unique vision, the incredible acting skills of Oscar winner Kevin Spacey, and a great and timeless story of power, corruption and lies, we think ‘House of Cards’ will become a big hit among Netflix members and thus, represents a manageable risk,” Sarandos wrote.

Related story:

As telecom industry evolves, Netflix is its biggest threat

By  |  02:07 PM ET, 03/18/2011

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