That increased-quality trend is also reflected in the original series that Netflix has put out. So far, it has made two critically acclaimed shows and also revived a cult classic. Of course, not everything that gets tons of viewers will meet the standard. Hemlock Grove got terrible reviews, but apparently brought in more early viewers than the mega-hit House of Cards, according to Netflix chief content officer Ted Sarandos. But because of the business model, the original programming will only get better, as The Atlantic's Derek Thomspon has argued. "The company's business decision to chase exclusive TV rights was not an act of charity for TV fans; it was a business decision," he writes. Just buying up streaming rights to existent series wasn't enough to continue growth. Rather, it needed to invest in its own shows—ones would hook subscribers so much that they keep paying for the service.

More remarkable, however, is how this model has changed the way television gets made in the traditional cable realm. The fees paid by Netflix (and services like it) for streaming rights make up a growing part of content owner's revenues, as a separate Wall Street Journal chart explains. For individual channels the money from these streaming deals can dictate what succeeds. Beyond giving The Killing new lifeblood, Netflix paid $1 million per episode for Mad Men, helping justify an expensive program with not that huge ratings.

That funding from the streaming TV companies, however, not only influences how current programming fares, but is starting to change the direction of future shows. When creating serial dramas, for example, these networks think about what will do well on Netflix in the future. Gary Newman, chairman of Twentieth Century Fox Television, says the network now encourages programs with story arcs that span more than one episode because of Netflix. "We just lean right into that," he told Sharma.

So far, the revolution has been limited to serialized dramas, but with the critical success of Orange Is the New Black —a Weeds-esque comedy-drama—and arguably Arrested Development we might soon be seeing a comedic revolution both on cable and Internet television.

This article is from the archive of our partner The Wire.

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