Netflix is making a huge bet in its quest to become more like HBO, with high-profile, original programming to differentiate it from competitors.
The company today is releasing the full season of "House of Cards" with 13 episodes -- and offering the first episode for free to non-subscribers.
If non-subscribers want to view the remaining episodes of the political drama, they need to sign up for a minimum $7.99 per month account. It could be that customers sign up for a month, watch the complete "House of Cards" series, and then cancel the service. But Netflix is investing in exclusive programming to try to keep those monthly payments coming.
"House of Cards," starring Kevin Spacey and Robin Wright, is believed to cost around $50 million. The company will also throw some marketing at "House of Cards," although the Netflix landing page for non-subscribers doesn't yet mention anything about the new program.
The company has already been producing original content with "Lilyhammer," which will be entering its second season. Netflix is also exclusively producing a horror thriller, "Hemlock Grove," that will debut on April 19, "Orange is the New Black" from the creator of "Weeds," and "Derek" with Ricky Gervais. In addition, Netflix is bringing a fourth season of "Arrested Development" in May to its subscribers. Netflix also inked a major exclusive deal with Walt Disney to stream films from Walt Disney Animation Studios, Pixar Animation, Marvel, and Disneynature.
In a recent note to shareholders, CEO Reed Hastings laid out how Netflix believes it is disrupting linear TV:
Imagine if books were always released one chapter per week, and were only briefly available to read at 8pm on Thursday. And then someone flipped a switch, suddenly allowing people to enjoy an entire book, all at their own pace. That is the change we are bringing about. That is the future of television. That is Internet TV.
Hastings is betting that Netflix's available market worldwide has strong growth potential as more people globally get access to fast broadband and an array of powerful devices to consume video content on demand. That's a safe bet. Netflix added 10 million subscribers in 2012, now totaling 33 million, and offers it service in 40 countries so far.
Whether Netflix can consistently produce hit shows that will accelerate subscriber growth and increase what the company can charge for the service remains to be seen. If "House of Cards" is any indication, Netflix could do well at the HBO game. In a review, the Los Angeles Times predicted that "House of Cards" will "in all probability become the first nontelevised television show to receive an Emmy nomination, or four."