Wary of competition from Hulu, Netflix is bolstering its streaming service through aggressive expansion of its online catalog. According to a report out Thursday, the company is in negotiations with studios to gain rights to current episodes of primetime television shows, and is said to be willing to drop between $70,000 to $100,000 per episode.
Netflix certainly needs the content to stave off its growing rival Hulu. The TV-streaming company recently launched its premium Plus subscription service for $7.99 per month, which features a slew of current (ad-supported) shows. Netflix is more known for its long-tail content--older movie and television titles that are less expensive to stream--but the company aims to shred that image.
Its bold expenditures for contemporary primetime TV indicate not just a push for newer content, but marks yet another indication that Netflix is moving away from its DVD-by-mail business in favor of online streaming. Only last week, the company launched a streaming-only option for $7.99 per month (matching the price of Hulu Plus, coincidentally), while raising the rates for its by-mail service, which is rumored to cost the company around $600 million annually in postage fees. It's also inked big deals with Epix and Relativity Media to increase its online library, and has pushed out disc-free console access on the PS3 and Wii, as well as mobile access on the iPhone and iPad.
So far, the aggressive move away from its by-mail business appears to be paying off. Netflix CEO Reed Hastings recently boasted that 66% of subscribers now stream content online (up from 41% the same time last year), and said the company would soon be delivering more content online than it would through mail.
The question now is whether paying such large fees to stream current content is sustainable, especially without ads. If it's willing to drop up to $100,000 on new episodes, a whole season of Glee could cost the company several million dollars. How many TV shows can Netflix afford to keep its content updated and its library even with Hulu?