Netflix is rethinking its original series -- and it should make traditional media very worried

The term “Netflix Original” is often a bit misleading. While Netflix does have the exclusive global rights to many of these shows, that doesn’t mean the company actually produces the episodes itself.

Take smash hit “Orange Is the New Black,” for example.

That show is technically owned (and made) by Lions Gate, who licenses Netflix to exclusively carry it. Not only does Netflix not own “Orange Is the New Black” outright, but the licensing contract is structured in a way that makes it possible, down the line, for a rival streaming company like Amazon to carry it, Bloomberg reports.

But now Netflix is taking major steps toward producing more of its own content — true “Netflix Originals” — according to inside sources who spoke to Bloomberg’s Lucas Shaw. Netflix is not only considering filming comedian Chelsea Handler’s new show, but also two new comedy series, Will Arnett’s “Flaked” and “Lady Dynamite.”

Until this point, Netflix has mostly only produced one-off comedy specials and documentaries, though the company did produce the low-cost show “Wet Hot American Summer: First Day of Camp” recently, according to Bloomberg.

From partner to rival

This move signals a further commitment by Netflix to producing television in-house, along with all the new risks and logistical considerations that come with it.

But why now?

One reason for this shift could be the watershed change in the way legacy media companies view Netflix. Some big players have begun to sign licensing deals other with streaming services, like Hulu, or to give more episodes to pay-TV distributors. It seems they now view Netflix as a direct competitor, and not necessarily a useful partner.

And if this will be the climate moving forward, it makes sense that Netflix would want to become as independent as possible.

“Certainly the business rules around how we sell to SVOD (subscription video on demand) providers are changing, and our thinking is evolving,” James Murdoch, who heads 21st Century Fox, recently said.

And they have cause to reevaluate these relationships.

The number of people watching traditional TV is falling off the metaphorical cliff, while Netflix subscriptions continue to rise. This fact has not been kind to media stock prices, which have sustained several rounds of bludgeoning this summer.

To accommodate this new drive to produce content, Netflix has leased 200,000 square feet of new space in Hollywood, with the ability to add another 120,000, Bloomberg reports. Netflix will move into the space in early 2017.

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