Netflix has been making great strides setting itself up as a content distributor. The famous quote is that it wants to “be HBO before HBO becomes Netflix”. They seem to be following this model pretty well, offering movies and tv shows to their subscribers online.
However, while they are making some original content (see: House of Cards), most of their TV content is acquired from other sources. The potential problem that stems from this is what happens if the content providers get jealous of how much you are profiting off their works?
In an ideal situation, Netflix is paying enough for the content that the content owner (let’s say AMC) is happy to let Netflix deal with the bandwidth, customer service, etc. But, what happens if so many customers start cutting cable that they stop paying for AMC because they know they can just watch the episodes of “The Walking Dead” later on AMC?
This might be creeping up on Nickelodeon. There are reports that more people are watching Nickelodeon’s kid-centric shows on Netflix – where you can stream them without commercials and back-to-back-to-back – than on the cable channel.
Nickelodeon might get worried that it will become simply a producer/studio instead of a network. And that brings big changes to their business strategy.
I am going to predict that eventually Nick gets weary of Netflix’s power here. I’d bet to compliment (and potentially replace in the future) their cable channel, Nickelodeon launches their own web service/application that streams their content to consumers for a fee or with ad support.