Shonda Rhimes leaves ABC to join Netflix
Netflix announced that it had signed on the most illustrious creator working in television- Shonda Rhimes. While Rhimes coming on-board was a big victory in itself, but what is even more satisfying for Netflix is that they served a big blow to ABC, where Rhimes worked previously. Rhimes is a name synonymous with shows like Grey's Anatomy, How to Get Away with Murder etc.
Netflix is the world's top internet-based subscription video streaming service that allows users to watch TV shows and movies online. Established in 1997 by Reed Hastings and Marc Randolph, Netflix started its business in 1998, as a DVD mail order service. The company became a streaming video service in 2007, which initially streamed past seasons of TV shows from various channels, along with movies.
Despite saturation in the streaming industry, Netflix still has been gaining in terms of paid subscriptions. In the US, Netflix has 50.32 million paid subscribers up by 9,40,000 in the second quarter; and has 48.71 million subscribers outside the US. The international market has continued to be a pain point but the company is hopeful of making its first profit internationally in 2017.
Recently, Netflix has been at the receiving end, hinting at trouble for the company. In March, it was announced that many of Fox shows would be pulled off Netflix (perhaps because Netflix had poached Fox employees). Then, there were reports of Netflix being $20 billion in debt. Complaints regarding its new user ratings which had made user- experience worse further added to the company's distress.
Media and entertainment giant Walt Disney Company decided to end its relationship with Netflix and said no new Disney shows will be available on Netflix post-2019. Disney announced that it was buying a streaming video company- BAMTech for over $1.5 billion. With this, it also revealed its plans to enter into the streaming arena, delivering a huge blow to Netflix.
Signing Rhimes will be beneficial to Netflix as her shows don't cost as much as other dramas. Based on human relationships, the shows don't demand heavy CGI or special effects. To put things into perspective, "Orange is the New Black and House of Cards reportedly cost $4-4.5 million an episode whereas Sense8 and Game of Thrones reportedly cost $8-9 million an episode".
Disney had recently announced its breakup with Netflix and by signing up Rhimes, Netflix has won on more than one turf. By bringing Rhimes on-board, Netflix sent a strong message to Disney (ABC is a network owned by Disney) that they are a tough competition.