Streaming Content Wars Heat Up

Big media companies like Disney (NYSE:DIS) and CBS (NYSE:CBS) generate large amounts of additional revenue by selling old television shows to services like Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN) and Hulu (NASDAQ:CMCSA), but the really big money may come from helping streaming services produce their own content.

“When you look at the Netflixes of the world and the Amazons of the world doing new production, we welcome that,” CBS CEO Les Moonves said in Wednesday’s earnings call.

“We are talking to Netflix about a potential deal to produce a show for them. Until they are doing 22 hours a week of premium content, we don’t look at them as a competitor, but rather another place to put our content, whether it’s original or buying our libraries as they have,” he said.

Moonves did not offer any further details, and explained that he would not discuss the matter further until a deal was finalized.

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Earlier this month, Netflix launched “Lillyhammer,” its first original series, while Hulu launched “Battleground.” Both shows received less than stellar reviews, but the future holds more promise.

Later this year, Netflix will debut “House of Cards,” a series starring Kevin Spacey, while Twentieth Century Fox (NASDAQ:NWS) is producing a revival of the cult hit “Arrested Development” for Netflix.

As online media companies seek to produce better quality original shows, major media companies could play a bigger part in the process.

While it may appear that online media providers are trying to corner the entertainment industry, the move to produce original content is still relatively small. Instead, the recent moves by Netflix and others appear to be an attempt to differentiate themselves from increasing competition in the streaming industry, and not to compete with major production studios and networks.

In February, Verizon (NYSE:VZ) and Redbox (NASDAQ:CSTR) announced a joint venture to provide both physical media and streaming content for subscribers. Later this year, Apple Inc. (NASDAQ:AAPL) is expected to launch a television unit that is capable of streaming content.

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com