Monday, May 12, 2014

Should Netflix Stop Outsourcing Its Content Deals?

Netflix (NASDAQ: NFLX  ) airs a handful of original shows, including Emmy winner House of Cards and future awards favorite Orange Is the New Black. But the streaming video veteran doesn't actually produce these shows in-house, preferring to farm that work out to specialists in the field.

Many Netflix skeptics see this outsourcing model as a sign of weakness, doomed to long-term failure. But is that really true?

In the video below, Fool contributor Anders Bylund explains how AMC Networks (NASDAQ: AMCX  ) and Time Warner's  (NYSE: TWX  )  HBO actually follow the same model in many cases. Lions Gate (NYSE: LGF  ) and Sony (NYSE: SNE  ) may not own any American distribution networks, but they're more than happy to create high-quality content like Breaking Bad or Mad Men for others to distribute. Netflix simply follows a tried-and-true industry practice here.

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