Netflix poaches Shonda Rhimes: 'This is war'

Shonda Rhimes. Photo / AP

By Hamza Shaban ·

Shonda Rhimes, the creator behind smash television hits, such as Grey's Anatomy and Scandal, will soon develop new shows for streaming giant Netflix, and the platform's 100 million worldwide subscribers, the company announced Sunday.

Rhimes and her production company, Shondaland, were hired away from ABC under a multi-year deal, marking the latest aggressive play by streaming services to go head-to-head with Hollywood and the traditional powers of the entertainment industry.

The signing of the award-winning writer and producer was a massive win for Netflix, analysts say, and highlights the mounting competition among studios for top-tier talent. Streaming players such as Netflix and Amazon are investing billions of dollars to challenge the cable television model, vying to offer consumers entire libraries of original content, which are tailored to specific audiences and available on a range of devices, at the push of a button.

Just days ago the battle for premium programming intensified. Last week Netflix said it was buying the comic book company Millarworld, the publisher behind Kingsman and Kick-Ass, in a deal that gives Netflix the tools to make its own interconnected universe of superheroes films and television shows - and a chance to emulate Disney and Marvel's wildly successful run.

That same week Netflix also announced a new six episode series starring former The Late Show host David Letterman. And Amazon, for its part, said on Friday that it had inked an exclusive deal with Robert Kirkman, the creator of AMC's The Walking Dead, who will create new shows for its streaming service. Neither Netflix nor Amazon disclosed how much the deals were worth. (Amazon chief executive Jeffrey P. Bezos also owns The Washington Post)

Talented producers are now commanding much more power in the rush by entertainment companies to acquire the most compelling shows, said Ross Gerber, chief executive of Gerber Kawasaki, an investment management firm based in Santa Monica. As Netflix aims to develop more of its own programming, the company is flexing its spending muscle to court exceptional producers. In the case of Rhimes for example, she said in a statement Sunday that Netflix understood what she was looking for - "the opportunity to build a vibrant new storytelling home for writers with the unique creative freedom and instantaneous global reach provided by Netflix's singular sense of innovation." Netflix offers its streaming service to more than 103 million people across 190 countries.

"It's poach city over there," said Gerber. "This is war, and everyone is going to start circling their wagons around their content creators - because anything that they do is of high value."

For streaming companies and TV networks, the arms race for top programming will likely result in escalating costs, said Michael Pachter, a research analyst at Wedbush Securities, a Los Angeles-based investment bank.

"With Netflix entering the bidding on broadcast TV talent, you can expect that Amazon will do the same and HBO will do the same - and it means the cost for everybody goes up." And since commercial TV networks may no longer get first dibs on shows from talented content creators, streaming services may become more and more attractive to audiences at home.

But the broad shift toward streaming is also proving to be a more fragmented consumer experience than many anticipated. While Americans have access to more content than ever before, entertainment companies are now running services with unique and increasingly narrow offerings, looking to squeeze subscription revenue from customers wherever possible. The traditional cable TV bundle may seem outdated, but a flood of direct-to-customer streaming services may make cutting the cord more complicated.

Rhimes' hiring comes as Disney, ABC's parent company, announced that it will unveil a streaming service of its own, and will eventually part ways with Netflix, removing its sought after movies like Moana and Zootopia from the streaming platform in 2019.

While some industry observers questioned Disney's late entry into the competitive world of Internet TV, others emphasised the blow to Netflix, which will soon be stripped of immensely popular children's content. Some experts viewed the timing of Shondaland's Netflix deal as a reprisal of sorts. "Getting a major producer from Disney after this major announcement was clearly not coincidental," said Gerber. "I think Netflix is going to do more of this."

The Los Gatos, California, streaming company trumpeted its partnership with Rhimes as a significant victory. "Shonda Rhimes is one of the greatest storytellers in the history of television," said Ted Sarandos, Netflix's chief content officer in a statement Sunday. "I've gotten the chance to know Shonda and she's a true Netflixer at heart - she loves TV and films, she cares passionately about her work, and she delivers for her audience."

Rhimes's existing ABC programs will continue to run on the network. While specific shows have not been named in her deal with Netflix, Rhimes is slated to develop both original series and special projects. The cost of the deal was not disclosed.