Friday, March 18, 2011

Netflix Gets Its First Show & New Competition

Netflix has bought the rights to air "House of Cards," a David Fincher-directed, Kevin Spacey-starring TV show.  The announcement is already 2 days old, but I've been following Netflix in the news here, so I can't pass this up. The AV Club gave me the heads up first, so I invite you to read about it there.

Done? Well, it's an odd development, as this means Netflix beat out folks like HBO, Starz, and/or AMC to get these rights. It's also odd because it doesn't have a channel on which to air anything. No matter what, this will be the first major Internet-only show...

Of course, this is also a significant event in what I've dubbed "The Rental Wars." This particular phase involves a big move that will distinguish Netflix from the competition (which will eventually include Redbox). This series is a drama, and it already has two big names attached to it. Could Netflix become the next AMC?

Almost certainly not, given how expensive shows are. Then again, the model used by cable in the original programming market is a big help. It's actually not too much of a strain to finance 19 total eps for two seasons of "The Walking Dead," or 12 for "Boardwalk Empire." It's certainly easier than the 20-24 episode standard of network tv.

So this blending of tv and streaming internet raises lots of possibilities. Will Netflix make the show available at a specific time every week? And how long before it's released, ironically, as a dvd? It's the incorrect use of the word irony, but you get my point.
Also, anything resembling the traditional ratings system won't be very helpful. On the upside, the show will get full credit for the number of times it's viewed. On the downside, where will the show revenue come from? Advertising?

People today play Netflix "in the background" just like they did with tv - what's going to be the sign that the show has followers, aside from internet reporters? What are the odds that reviewers will be describe this series more in terms of an "event" or "next big thing," and not as a show?

I guess I should mention something about the show concept: the original BBC series followed a political anti-hero who has a great big scheme to gain power in his country's ruling power. The admirable jerk wants to become Prime Minister, and gain power over Parliament.

Unfortunately, not this Parliament.

Look at this Wall Street Journal article on the "HoC"  acquisition. Netflix has more subscribers than Showtime and Starz, but less than HBO. Those figures are even more impressive as WSJ notes that Netflix had a 63% jump in subscribers between Q4 2009 and Q4 2010. It seems the company goes toe-to-toe with anyone who makes money off movies - on-line or not.

In any case, at least this choice to move into original programming raises a lot of questions - and tons of publicity. And, as I said above, a unique advantage over any competitors. Hulu, as far as I know, only offered "If I Can Dream" as an exclusive. Haven't heard of that obscure reality show? Me neither. It's not like Hulu has a "Hulu Originals" channel...

From a personal perspective, it's a shame that all this effort is going to an American version of a popular British novel and tv series, "House Of Cards." I would've hope that such a big move involved top-to-bottom creativity - I mean, Netflix doesn't offer the highly-praised original for Instant Viewing. Also, the "franchise" whose success it's riding off is a mini-series that's 21 years old. Baby steps, right?...

Not this Parliament, either - although both are banned outdoors...

No matter what else I say, if it's directed by Fincher, it'll almost certainly be worth watching. Spacey is also an incredibly reliable actor, so "HoC" has that little advantage too. I just hope it's set in Australia or Italy or UK-era Hong Kong. Anyplace but the States, really - I'm burnt out on it and I already live here.

I mentioned Netflix' competition earlier, and that group is growing larger. Zediva has recently opened its doors to do business - as an online service that basically remotely rents you a DVD; the disc plays in their CA location, but you watch it on your computer. Best of all, nifty DVD features, like subtitles, are accessible. And since they buy their own DVDs, Zediva doesn't have Netflix' or Redbox' 28-day delay for new releases.

Like the article above, I did not discover this news myself or through some really obscure source. Credit goes to Georg Szalai of The Hollywood Reporter. It's his article, via yahoo's movie blog, that told me about Zediva.

This is a very interesting business model. As Szalai's article notes, the cost is generally $2 per rental, but bulk purchases can drop it down to $1/dvd. It raises some legal issues, too - copyright owners (studios) may claim that this method is illegal.

I actually studied copyright law, and thought the only profit you can make off a movie is if you resell your copy for more than you paid. Of course, the laws - or their interpretation - can change. And, now that I think about it, it sounds pretty unlikely that every single video rental store in the US had a special agreement with Fox, WB, MGM, etc....

To be perfectly honest, companies file suit - or threaten to file suit - when there's just the slightest possibility that someone is doing something against the law. Or when there is no legal violation, but a company thinks someone will be scared off, reacting as if they had broken the law. Or when they're trying to shift legal interpretations to something more beneficial (for the company itself, of course).

I know that sucks - you can see that "take down" notices have removed videos that are clearly fair use clips, parodies... Still, there are two reasons for being protective: for one thing, a copyright holder is supposed to defend their property or they may be seen as waiving their rights. For another, big businesses look to get lucky from a lawsuit, or its threat, just like everyone else...

This seemed important enough to change my weekly posting plans and bump an article over to next week. And I'm still not sure if whether I should just let news sit for a while before posting it. A final odd note: Netflix didn't even bother writing anything about this on its own blog. That's kinda sad....

UPDATE: I must admit, I made a mistake. A day after everyone was buzzing about it, Netflix did address the deal on their blog. Their post explains how Netflix acquires various series, and how the "HoC" deal is different.

My slight snark: the explanation is written in such a crystal-clear fashion, it's as if this is the "stork" description for TV. "You see, TV shows come from a magical place called 'copyrights...''

And, technically, I'd already written this entire article when they posted theirs, so. "Nyah nyah," Netflix! Luckily for them, I wanted to post on a Friday instead of a Thursday.


  1. Fascinating analysis T, sheds a new light on an issue I thought I understood.

  2. See, I hate this (about Netflix getting a show). Every company that sells/rents media eventually gets greedy...has to have their name in the spotlights, too...wants to attend premieres and be starfuckers or something. But you know what comes with being a content producer as well as a seller of other companies' content? That's right...a conflict of interest. ESPN wasn't content to air sports, they had to start up their original programming. IFC is a film producer, as is Starz and god knows how many other channels. I just think it's a bad move long-term. Do one thing and do it well; when you're priorities get muddled, so does your message and your audience.

  3. Thank you both!

    Fletch, some people would see this is innovative. I see it as "interesting." To support your view, look at some of the links within one of my earlier Netflix articles (the one on dropping dvd options from devices and net bandwidth, iirc).

    I think one article had the CEO himself talking about all physical discs as if they would obviously be phased out along with vacuum tubes or carberators. It sounds like someone talking about the haircut they had 2 decades earlier.

    The way "business success" works, as far as I know, is: (A) you raise prices, (B) you lower your costs, or (C) you do something new. The part about biz that always sucks is that even when option C is wildly successful, someone will (sooner or later) step in and start suggesting that it's time to apply A or B to C.

    I like your idea that there is something like an approaching conflict of interest here. Reporters are supposed to "objectively" report the news regardless of their personal/political/etc opinions. And yesterday I learned that Showtime is pulling its current, on-going shows off of Netflix Streaming.

    Although Showtime wasn't obligated to keep Californication and Dexter available - series that are "over" will remain - I'm sure that the HoC purchase made Showtime think money was taken out of their pockets.


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