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For example, Spacey says there will be 146 pilots made this year at the cost of $US300-$US400 million. Only 56 of those will actually be made into a series. “Th

For example, Spacey says there will be 146 pilots made this year at the cost of $US300-$US400 million. Only 56 of those will actually be made into a series. “That makes our House of Cards deal for two seasons really cost effective,” Spacey says in the speech. Of course it seems cost effective when the show is a big hit. But had it been a flop, it would have seemed a colossal waste of money - something that could easily have been surmised with a much smaller investment. For Netflix's strategy to work, they'll need to be able to continue to pick winners at a much higher percentage than the traditional television network has been able to. To do so they'll need to have content producers that understand what it takes to tell a good story. I think the downside is that this high risk strategy is likely to make them more risk averse in the shows that they choose to produce. They'll be a lot less likely to invest in first time writers, actors and directors. And they'll probably shy away from any story that is at all experimental in nature.

shazzdeeds 13y ago
This is a good point. A company should not be expected to just throw a bunch of shows out and see which ones stick. Too expensive. What stuck out to me most in the speech was Kevin Spacey's quick mention of Netflix's response to the pitch: "We ran the numbers and we think our customer base would like it". Media outlets thinking of taking the all-in approach will need the technology to calculate and hedge the risk . Netflix clearly has that in place, and it helped convince them to take a chance.
- hershel 13y ago
  It's even better for netflix. They has the technology to allow directing decisions , small and big, be decided by data : http://gigaom.com/2013/07/25/at-netflix-big-data-can-affect-even-the-littlest-things/ http://gigaom.com/2013/07/25/at-netflix-big-data-can-affect-...
elq 13y ago
The notion of what makes a flop is quite different in the netflix model vs normal TV.
- avalaunch 13y ago
  Could you elaborate on what you think that difference is?
  - Osiris 13y ago
    I imagine that it would be possible to make lower-cost shows that attract a smaller audience but still earn enough to be worth it. For example, space sci-fi has not representation on network TV right now despite existing demand for such a product. The problem is the number of people that want to watch such a genre are smaller than those that want to watch reality TV or other genres. The potential with a distribute model that doesn't have a TV schedule is that it doesn't have to compete with other shows in the same timeslot, thus allowing for a less-expensively produced show to see earn enough money even if the audience is relatively small. That is the market that I'm looking forward to, removing the time-slot competition and allowing shows to compete on quality.
    - avalaunch 13y ago
      I agree entirely but that's what makes Netflix's choice all the more interesting. They have the opportunity to serve the long tail but thus far they haven't (with their original programming at least). Instead they've spent 100 million on 1 show on the belief that it would pay off big - in both attracting new customers and retaining existing.
  - bluntly_said 13y ago
    Well, in general Netflix seems interested in providing content that falls into one of two categories. The first is what I think of as "low barrier to entry" tv shows. These are shows that people can turn on while cooking, cleaning, or doing other things around the house to replace pre-programmed tv channels. "Many of the most-watched series have been off the air for years, like Star Trek and The X-Files." [1] Personally, I think this kind of content goes a long way to keeping subscribers on Netflix, when they might have otherwise been tempted to turn on a tv channel. The second kind of content Netflix appears to be interested in is content that pulls in new subscribers, This could be things like movies that were very recently released, or their own original content (mainly to replace the expensive deals to get those new movies). But the thing about Netflix is that even a new show that might be viewed by other network producers as a flop can end up being a a good call. This is because Netflix isn't constrained by the same limits that cable tv is. The shows Netflix produces don't need to be blockbuster hits, as long as they can help fill the gaps in the "low barrier to entry" tv that keeps subscribers happy over the long run. A cable channel can only show one thing to all it's viewers at a time, so filling that time slot with something that everyone likes is critical. Netflix can afford a slower burn with content that might not get a million viewers in the first season, but could easily be watched by several million viewers in the next 5 years. [1] http://finance.yahoo.com/blogs/the-exchange/netflix-dropped-favorite-movie-used-164043268.html http://finance.yahoo.com/blogs/the-exchange/netflix-dropped-...
intopieces 13y ago
You left out the fact that Netflix has the viewing habits of millions of users, freely given in the most detailed way ever conceived. Remember, Nielsen ratings are self-reports written in a diary; this is real time viewing data. They have a better ability to understand what people enjoy watching.
pkulak 13y ago
I bet I could read a script and tell you if it's shit or not. Why do you even need a pilot? And the funny thing is, good shows get watched. There's a huge market for quality television. Just look at what Mad Men, House of Cards, Game of Thrones, etc have done for their networks. Is it really that there aren't enough writers coming out of Harvard who can write a Mad Men script? Do we only have writers who can write shitty sitcoms? I doubt it. Or is Mad Men that expensive to produce? Watch one some time. Most shows take place in two locations and are all dialog. They could almost be plays. But for some reason NBC, CBS, and FOX only buy shows with a laugh track or a panel of judges. I don't get it at all. Sorry, only those first two sentences are an actual reply. I got carried away...

shazzdeeds 13y ago

This is a good point. A company should not be expected to just throw a bunch of shows out and see which ones stick. Too expensive. What stuck out to me most in the speech was Kevin Spacey's quick mention of Netflix's response to the pitch: "We ran the numbers and we think our customer base would like it". Media outlets thinking of taking the all-in approach will need the technology to calculate and hedge the risk . Netflix clearly has that in place, and it helped convince them to take a chance.

hershel 13y ago
It's even better for netflix. They has the technology to allow directing decisions , small and big, be decided by data : http://gigaom.com/2013/07/25/at-netflix-big-data-can-affect-even-the-littlest-things/ http://gigaom.com/2013/07/25/at-netflix-big-data-can-affect-...

elq 13y ago

The notion of what makes a flop is quite different in the netflix model vs normal TV.

avalaunch 13y ago
Could you elaborate on what you think that difference is?
- Osiris 13y ago
  I imagine that it would be possible to make lower-cost shows that attract a smaller audience but still earn enough to be worth it. For example, space sci-fi has not representation on network TV right now despite existing demand for such a product. The problem is the number of people that want to watch such a genre are smaller than those that want to watch reality TV or other genres. The potential with a distribute model that doesn't have a TV schedule is that it doesn't have to compete with other shows in the same timeslot, thus allowing for a less-expensively produced show to see earn enough money even if the audience is relatively small. That is the market that I'm looking forward to, removing the time-slot competition and allowing shows to compete on quality.
  - avalaunch 13y ago
    I agree entirely but that's what makes Netflix's choice all the more interesting. They have the opportunity to serve the long tail but thus far they haven't (with their original programming at least). Instead they've spent 100 million on 1 show on the belief that it would pay off big - in both attracting new customers and retaining existing.
- bluntly_said 13y ago
  Well, in general Netflix seems interested in providing content that falls into one of two categories. The first is what I think of as "low barrier to entry" tv shows. These are shows that people can turn on while cooking, cleaning, or doing other things around the house to replace pre-programmed tv channels. "Many of the most-watched series have been off the air for years, like Star Trek and The X-Files." [1] Personally, I think this kind of content goes a long way to keeping subscribers on Netflix, when they might have otherwise been tempted to turn on a tv channel. The second kind of content Netflix appears to be interested in is content that pulls in new subscribers, This could be things like movies that were very recently released, or their own original content (mainly to replace the expensive deals to get those new movies). But the thing about Netflix is that even a new show that might be viewed by other network producers as a flop can end up being a a good call. This is because Netflix isn't constrained by the same limits that cable tv is. The shows Netflix produces don't need to be blockbuster hits, as long as they can help fill the gaps in the "low barrier to entry" tv that keeps subscribers happy over the long run. A cable channel can only show one thing to all it's viewers at a time, so filling that time slot with something that everyone likes is critical. Netflix can afford a slower burn with content that might not get a million viewers in the first season, but could easily be watched by several million viewers in the next 5 years. [1] http://finance.yahoo.com/blogs/the-exchange/netflix-dropped-favorite-movie-used-164043268.html http://finance.yahoo.com/blogs/the-exchange/netflix-dropped-...

intopieces 13y ago

You left out the fact that Netflix has the viewing habits of millions of users, freely given in the most detailed way ever conceived. Remember, Nielsen ratings are self-reports written in a diary; this is real time viewing data. They have a better ability to understand what people enjoy watching.

pkulak 13y ago

I bet I could read a script and tell you if it's shit or not. Why do you even need a pilot? And the funny thing is, good shows get watched. There's a huge market for quality television. Just look at what Mad Men, House of Cards, Game of Thrones, etc have done for their networks. Is it really that there aren't enough writers coming out of Harvard who can write a Mad Men script? Do we only have writers who can write shitty sitcoms? I doubt it. Or is Mad Men that expensive to produce? Watch one some time. Most shows take place in two locations and are all dialog. They could almost be plays. But for some reason NBC, CBS, and FOX only buy shows with a laugh track or a panel of judges. I don't get it at all. Sorry, only those first two sentences are an actual reply. I got carried away...