Business Models for Web Properties & Cable TV Channels Are Converging

HBO started as a premium movie channel but eventually, it moved into the business of making original content.  And while today HBO's schedule still has a lot of movies on it, many people buy subscriptions for access the network's critically acclaimed original series.

HBO's model has been coped by more and more cable channels, including AMC, which had it's breakout original series Mad Men.  Now Netflix is doing the same thing.  Unable to buy fresh content at reasonable prices, Netflix has reached a size and scale that allows it to start making original productions.

Netflix will not be the last web player to do this either.  Others such as Hulu or LoveFilm and Amazon may need to start building their own primetime schedules.  Traditional broadcast and cable networks are trying hard to keep the "contagion" of Internet TV from spreading.  Withholding top series and fresh content are a key part of that strategy.

But Hollywood is not monolithic.  Buyers with money can always get good content made.  That said, Hollywood is full of smart money and there's a long history of people making small fortunes out of big ones in Hollywood.  Don't be surprised if Netflix gets burned a few times before it gets the model right.

Online productions get bigger and competitive.  Photo from Wikimedia.