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Netflix isn't going to rely on Hollywood to make its TV shows

Netflix nearly single-handedly proved that original programming could work for subscription streaming services, and now it's looking to take the next step by producing new shows completely in-house. According to a report from Bloomberg Business, the company may shoot its new Chelsea Handler talk show completely on its own in new studio space it recently leased in Los Angeles, with other programming potentially to follow. (The company has begun dabbling in the arena with some of its previous documentaries and the Wet Hot American Summer prequel series.)

To get an idea of what this might mean for Netflix, it's important to take a step back and look at how television is traditionally made. While audiences most often associate a network with a given show — AMC with Mad Men, for example — that network isn't physically making the show in question. Instead, the finished product is made by a separate production company, which may not be affiliated with the broadcast network at all. (20th Century Fox Television produces Fox's New Girl, for example, but Breaking Bad came courtesy of Sony Pictures Television.)

It's all about exclusivity

Thus far, Netflix's highest-profile shows have followed that same model, including House of Cards (Media Rights Capital), Orange is the New Black (Lionsgate Television), and Unbreakable Kimmy Schmidt (Universal Television). The dynamic has allowed Netflix to neatly insert itself into the television ecosystem, first by licensing shows for online streaming, and then by simply joining traditional cable and broadcast networks as a fellow buyer. But the scenario leaves Netflix with being nothing more than a distributor, securing programs for a fixed period of time before agreements lapse and competitors have the opportunity to step in. By producing its own content from development to release, Netflix could ensure its new shows remain on Netflix and only on Netflix, an increasingly vital point as the dynamics in the streaming space shift more toward a battle for exclusivity.

The move has the potential to inflame the company's relationships with existing production companies, just as other streaming services like Hulu and Amazon are locking down big deals of their own. But according to Bloomberg's report, Netflix still plans to work with existing production companies for bigger, flagship shows — today it announced it was picking up a third season of Black Mirror, for example — and given the incredible success the streaming service is having this year, those production companies should still be inclined to play along, for the time being.