EXCLUSIVE: Video streaming juggernaut Netflix is becoming an original programming player. In what is probably the biggest gamble in its 14-year history, I hear Netflix has outbid several major cable networks, including HBO and AMC, for Media Rights Capital’s drama series House of Cards, executive produced and directed by David Fincher and exec produced by and starring Kevin Spacey.

Negotiations are still going on, but I hear Netflix landed the drama project by offering a staggering commitment of two seasons, or 26 episodes. Given that the price tag for a high-end drama is in the $4 million-$6 million an episode range and that a launch of a big original series commands tens of millions of dollars for promotion, the deal is believed to be worth more than $100 million and could change the way people consume TV shows.

Ever since Liberty Media chairman John Malone in October drew a comparison between Netfix and HBO, industry experts have speculated whether Netflix would become the next HBO by venturing into originals. HBO, too, established itself as premium cable movie channel before hitting gold with original series that have now become its bread and butter. Netflix, which dominates the movie streaming market at 61%, had said in the past that it was not interested in branching into original programming. Until now.

Given the strong interest in House of Cards from multiple networks, observers had speculated that the project may get an episodic commitment, but a massive two-season order is pretty unheard of these days. Going straight to series itself is a risky proposition as attested by NBC, which recently tried it before reverting to the traditional pilot model. Besides the sandals-and-toga Rome, which was a co-production with the BBC, HBO has piloted pretty much all of its projects, including those with A-list talent such as Martin Scorsese/Terence Winter’s Boardwalk Empire and Michael Mann/David Milch’s Luck starring Dustin Hoffman. AMC went straight to series on The Walking Dead but with a modest six-episode order. Rome and Fox’s CGI extravaganza Terra Nova started off with 13-episode orders. Starz, which has been going straight-to-series with its dramas, ordered 10 episodes of Camelot and 8 of Boss. Snatching a high-profile project like House of Cards is certain to put Netflix on the map. But by committing to air/stream and market a 26-episode original series, something it has never done before, it will also put the company to the test.

Despite its dominant position in the movie-streaming business, Netflix, which was just upgraded to “buy” by Goldman Sachs, has been feeling the heat from new competition, including Amazon.com, which last month announced it was entering the subscription streaming-media business, and Facebook, which last week announced a deal with Warner Bros. to experiment with streaming the studio’s The Dark Knight directly through the social media service. In fact, on the day the Facebook/Warner Bros. deal was announced, Netflix’s shares fell 6%.

Netflix has been looking to diversify beyond movies. The day Amazon.com announced its entry into the online video space, Netflix unveiled a $200 million deal with CBS for two years for nonexclusive rights to stream such shows as The Twilight Zone, Star Trek, Family Ties, Twin Peaks, Cheers and Frasier. Adding original series to the portfolio seemed like a natural next step.



In August, Netflix shored up its core streaming business with a $1 billion, five-year pact for online streaming rights to movies from Paramount, Lionsgate and MGM. (It also inked a pact with Relativity Media, while renewal talks with early movie partner Starz, which has provided Netflix with access to Sony and Disney titles, are still ongoing.)

Meanwhile, MRC has built its TV business on a direct-to-series model with such projects as animated comedies The Life & Times of Tim and The Ricky Gervais Show, the short-lived series for the CW’s Sunday block and the Lifetime comedy Rita Rocks, which went through pilot but in a two-pilot deal with the network guaranteeing that one of the pilots will go to series.

In his TV directorial debut, Fincher will helm the pilot for House of Cards, which is based on the book and British miniseries of the same name. Fincher is executive producing with Eric Roth, Joshua Donen as well as Spacey and his producing partner at Trigger Street Prods. Dana Brunetti. The political-thriller novel House of Cards, written by Michael Dobbs, a former Conservative Party chief of staff, is set at the end of Margaret Thatcher’s tenure as prime minister and follows a British politician with his eye on the top job. In 1990, it was adapted by the BBC as a miniseries written by Andrew Davies and starring Ian Richardson. Fincher’s adaptation, set in the U.S., was written by playwright-screenwriter Beau Willimon (The Ides of March).