Netflix, Hulu and the golden age of content

Hulu is launching its first scripted original series in February, and the company is already thinking about investing more in original content: Hulu’s chief content officer Andy Forssell told Bloomberg on Sunday that it might raise money this year to spend more on shows you haven’t seen on TV yet.

Hulu’s move toward original content follows similar announcements by Netflix, which is going to launch its first original series this spring as well. For both companies, going into original content is in part a reaction to the threat of being locked out of deals for popular TV shows. But it’s also part of a larger movement toward a new Hollywood, where content is produced for online-only properties, money is raised differently and networks aren’t the only game in town anymore. It’s a new golden age of content, and these are its key players:

Netflix has been spending big on original content, in part to make up for losing access to movies from Starz, in part to bolster its international expansion: You don’t have to renegotiate deals in every single country if you own a show outright. Subscribers will have a first chance to check out original Netflix fare on February 6th, when Lilyhammer, a show starring Steven van Zandt as a New York mobster in witness protection in Norway, debuts on the service. Netflix will also debut the Kevin Spacey series House of Cards later this year, and bring back Arrested Development early next year.
Hulu’s first scripted original, titled Battleground, will debut on February 15. The show is a timely dramatization of the primary race, and it’s not Hulu’s only stint into original programming. The company also ordered another season of Morgan Spurlock’s documentary series A Day in the Life, and a six-part documentary miniseries from star director Richard Linklater. Previously, Hulu had the exclusive rights to the reality show If I Can Dream in 2010. Hulu’s CEO Jason Kilar recently announced that he intends to spend $ 500 million on content this year.
YouTube has been investing big in original content and is in the process of rolling out around 100 new channels from Hollywood A-list celebs and YouTube stars alike, including contributions from Madonna, Rainn Wilson and Ashton Kutcher. The Google-owned video site is paying its new high-profile talent advances against ad revenue, and experienced YouTubers have been able to make six-figure income through the site for some time. And YouTube is not alone with its focus on A-list web content: Both Yahoo and AOL are investing heavily in web series.
Kickstarter The crowd-funding site, as well as its competitor IndieGoGo are increasingly playing a role in the financing of movies and web series – and it certainly helps that even Hollywood’s rich and famous are turning to the site. One example: Colin Hanks raised $ 92,000 last summer to finance the making of a documentary about Tower Records.
Amazon Studios is at the forefront of another funding game changer: The Amazon venture, and others like FilmFunds.com, are using crowdsourcing techniques as well as experienced Hollywood to decide who should get funding. Amazon Studios paid $ 580,000 to script writers and $ 2.1 million for test movies in 2011.
BitTorrent. Consumers may be flocking to streaming services like Netflix, but don’t rule out the power of file sharign just yet. BitTorrent Inc. announced recently that it has 150 million active users a month, and the company has been utilizing this giant user base to raise awareness as well as money for film makers as well. At the helm of these efforts is VODO.net, which has raised close to $ 90,000 for the P2P-exclusive TV show Pioneer One alone.

Taken by itself, any of these efforts may be dwarfed by the budgets established cable networks like HBO spend on original content. But combined, they are beginning to represent a power shift towards online-exclusive distribution.

And there’s something else going on here that’s even more profound: Previously, web series and the occasional YouTube short used to be about getting discovered by Hollywood and eventually having your show picked up by TV networks. These days, YouTube itself is becoming a way to make money; Kickstarter and Amazon are becoming options to raise more money; and eventually Netflix, and not TV, may be the big break. Benefiting from this are consumers, who are going to see a lot more shows and movies show up on a lot more screens.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.