How FXX’s Deal for ‘The Simpsons’ Plays into Netflix’s Originals Strategy

/ Nov 18, 2013

Homer

FX Networks’ licensing deal with 21st Century Fox Television to bring “The Simpsons” to FXX beginning August 2014 is a landmark agreement as it brings the longest-running comedy series to cable for the very first time. It’s an even bigger deal because FXX also has complete, exclusive non-linear/VOD rights to the animated series, meaning every episode of “The Simpsons” will be available on the upcoming FX Now video app.

And it’s here, with those exclusive digital streaming rights, where the deal reinforces Netflix’s decision to become a TV programmer, rather than an aggregator of other people’s stuff.

In a bid to stay relevant, pay-TV operators and networks have been rolling out video services — referred to the industry as “TV Everywhere” — that allows paying subscribers to watch TV shows on a variety of different devices. This has been done to combat the rise of SVOD services like Netflix and Hulu Plus, which also offer viewers the chance to catch up on their favorite TV shows on their own time, and in doing so, have aided in fragmenting TV viewership and the ratings system the industry lives by.

With more competition in the marketplace, Netflix particularly and Amazon recently, as the retailer looks to build out its Prime Instant Video product, have been more interested in locking down exclusive licensing deals with TV studios. You’re more likely to pay for Netflix or Amazon Prime if they are the only places you can watch or rewatch one of your favorite shows.

During Variety’s Entertainment & Tech Summit, FX announced its intention to directly compete with Netflix via its FX Now app. When it launches in December, the video app will offer exclusive access to movies like “Iron Man,” “The Avengers,” and “Grown-Ups” (as Variety notes, Netflix has access to some of these titles during the pay-TV window, but not the basic-cable window, which is what FX is licensing the titles for). The app will now also be able to exclusively offer every older episode of “The Simpsons,” including the beloved glory years of the first decade.

Add this to the fact that pay-TV operators also want to have digital rights to programming as part of new carriage deals with networks, and Netflix and Amazon are up against an increasingly crowded and competitive marketplace for streaming TV content. And if the TV industry actually ever figures out a way for consumers to adopt TV Everywhere services en masse, then Netflix could have a serious issue on its hands.

Unless, by that point, Netflix has enough original content that losing exclusive rights to some other people’s popular shows won’t put much of a dent into the service’s subscription numbers. It’s no secret that this is why Netflix chose to move heavily into offering its own original and exclusive programming.

In 2014, Netflix says it plans to spend less than 10% of its overall “global context expense” on originals. The company famously refuses to disclose actual viewership numbers, instead only offering tidbits like “Orange Is the New Black” had higher viewership when it premiered than older originals like “House of Cards” did. Well if that trend continues, then optimistically speaking, it’s likely that Netflix’s originals will increasingly carve up a higher share of consumption on the service. Especially as high-profile projects like the second season of “House of Cards,” a sci-fi series from the Wachowski siblings, multiple animated shows from DreamWorks, and four new shows and a mini-series event produced by Marvel roll out in the coming years. And even more so, the day Netflix decides to own the content it offers under its Originals brand.

Television networks and operators will continue to be very protective of their assets against the rise of digital services like Netflix and Amazon Instant Video. The thing is, at some point, it won’t even matter for these services, as they will have valuable assets of their own to protect.

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