MG Siegler of Tech Crunch with another way that Netflix’s plans for original/exclusive content could work:
Each year, dozens of shows on network and cable television get cancelled. Most of these cancellations are for good reason. But every once in a while the hammer comes down on a show that’s considered to be a cult hit — or one that could turn out to be a real hit, if given more time. The problem, of course, is that these shows often don’t have the massive viewership numbers to sell a large amount of advertising against. But that model doesn’t apply to Netflix.
Every year the list of cancelled shows that are critically acclaimed and have devoted fans grows and grows (Terriers and Rubicon are two examples from 2010). Sometimes these shows are picked up by other networks, but often they die.
The only downside I see to idea of Netflix original/exclusive content is that it will cost them money and only increase their revenue if it attracts new subscribers. Long term, I am not sure if this will make sense because it’s not their primary business model and will cost them so much.