Why “Seinfeld” is coming to Netflix

Streaming is the future of TV. But for now a big part of the streaming business revolves around old TV shows.

Latest case in point: Netflix is paying a lot of money for the rights to show Seinfeld to its 150 million subscribers around the world, starting in 2021.

That means the show, which originally ran on NBC from 1989 to 1998, will be moving from its current streaming homes — Hulu in the US and Amazon in most of the rest of the world — for a five-year run.

Netflix isn’t saying how much it’s paying for Seinfeld’s 180 episodes. But the Los Angeles Times, which broke the news today, cites sources who say Netflix will end up paying more than the $500 million NBCUniversal is reportedly paying for The Office for its future streaming platform, or the $425 million Warner Media reportedly paid to get Friends back. Hulu’s current deal has it paying $130 million for six years of Seinfeld.

The theory underscoring the price hike: The price for TV shows that people have heard of, that also have big, bingeable back catalogs of 100 episodes or more, continues to rise in the US as more streaming competitors come online. Netflix is also streaming this stuff around the world, as opposed to the US-centric focus some other services have.

So the cost for Seinfeld is going to be a big number, which will certainly grab your attention when it comes out, sooner or later. But the bigger story is that Netflix is buying someone else’s high-profile programming instead of seeing high-profile programming that it currently streams leaving for a competitor.

Even if you don’t pay attention to the business of the streaming wars, you may have some idea that Netflix Is Losing Its Shows To Disney And Other People because that’s true: Would-be Netflix competitors including Disney, Comcast’s NBC, and AT&T’s WarnerMedia are taking programming that used to run on Netflix and bringing it back to their own, yet-to-launch streaming services.

That narrative isn’t completely true, since those Netflix competitors still sell some of their programming to Netflix, and may continue to do so in the future. And some shows and movies that leave Netflix may still end up back on Netflix because of existing deals.

But the idea that some popular stuff on Netflix is going away is obviously concerning to the streaming company, which already missed its subscriber numbers by a huge margin a few months ago — before the launch of any new competitors and before the high-profile deals to move those old shows to competitors actually kicks in.

So Netflix is happy to boast about this one:

It is certainly fair to wonder how much Netflix’s subscribers are clamoring for a show that used to be huge but hasn’t been making new episodes for 21 years. Then again, you could have said the same thing about Friends and The Office, which have both enjoyed big revivals, presumably due to their presence on a streaming service with a huge subscriber base.

It’s also fair to wonder, conversely, if Friends and The Office will end up being much less valuable to their new owners when they appear on their new services, since those new services will have much smaller subscriber bases, at least to start. And it’s also fair to wonder if anyone actually subscribed to Netflix because of Friends and The Office, and whether they will subscribe to NBC and WarnerMedia’s services because of them.

One thing that’s probably true: Even though Netflix has outbid its competitors for Seinfeld, the show will almost certainly be cheaper for Netflix on a per-subscriber basis than it would be for competitors, since it can spread those programming costs against that huge subscriber base.

Of course, you could use that argument for anything Netflix buys, and by employing that logic, you could argue that Netflix should always be the winning bidder for any project. Which isn’t the case.

It is the case that when it comes to Friends and The Office, those shows are returning to the corporate entities that created these shows (WarnerMedia’s Warner Bros studio made Friends for NBC). But while Sony, which made Seinfeld for NBC, has its own streaming service, you probably don’t spend much time on ... Crackle. (Have you ever even heard of Crackle?)

And unlike other companies with streaming services, Sony doesn’t appear to be interested in spending tons of money to build that one up. Not coincidentally, Sony’s entertainment group is often mentioned as a likely candidate to be acquired, either by a media company or a tech company with big media ambitions, like Apple or Amazon.

So that made this deal make even more sense.

To be sure: WarnerMedia, Disney, et al, are supposed to do these deals for their own properties, using market rates, and if they don’t, they could get in big legal trouble (see: the lawsuit Disney and Fox just settled over revenue associated with Bones). On the other hand: For the last few years, many of the TV and movie players’ most valuable properties have ended up back with the TV and movie players that made them, and they aren’t shy about discussing those plans.

The main takeaway: You probably aren’t going to subscribe to Netflix just to watch Seinfeld, and if in a couple years, Netflix is known as the place you can watch Seinfeld — instead of the place to watch new Netflix-created shows like Stranger Things or new Netflix movies like The Irishman — then Netflix is going to be in a lot of trouble. But since Netflix can buy Seinfeld, it did.

Not that there’s anything wrong with that.

Correction: This story has been updated to reflect the correct amount and duration of Hulu’s deal for Seinfeld. Hulu is paying $130 million for the right to run Seinfeld for six years.

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