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Summary:

Netflix has already won a home in the living room, and now its luring creative talent. That, plus it’s agility and data-driven programming could teach old-school TV how to change.

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The iconic poster for Netflix’s House of Cards shows star Kevin Spacey seated regally on the Lincoln Monument, blood on his hands. Outside of the direct reference to the deadly machinations of Spacey’s fictional southern congressman, Frank Underwood, it’s a good metaphor for the series’ ready-made conquest to scoop up Emmys next month as well as Netflix’s larger fortunes. It’s also a handy metaphor for the ends that digital streaming upstarts like Netflix will go to as they do battle with traditional players like broadcast and cable networks to secure eyeballs for original programming.

By giving viewers what they want, Netflix has not only goosed its subscription numbers and stock price, but it has instantly inserted itself into the conversation as a serious destination for content. Even if it isn’t yet burying old-school broadcast networks – or, at the very least, AMC and HBO – it has certainly made some impressive headway in changing the the dynamic of distributing original content (partly by distributing dynamic original content) in little more than half a year. 

NFLX Chart

NFLX data by YCharts

Speaking of Spacey, he recently set the Internet ablaze with his speech at the Edinburgh Television Festival, crystallizing Netflix’s position as an outlet of creative freedom for the next David Chase or David Simon, the kind of auteurs who used to see cable networks like HBO and AMC as their only salvation. It was a speech that outlined what should already be some evident realities to the traditional powers in television entertainment, but the fact that it came from someone so respected in the creative community gives these realities all the more power.

Spacey knows as well as anyone that his latest benefactor is not only able to give him more creative control and a more efficient form of delivery to a mass audience, but to also give that mass audience exactly what it wants when it wants it. Netflix can measure viewers responses to shows better than anyone has before in the medium of television.

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It knows how many of its customers binge-watched House of Cards that first weekend and how many still haven’t cracked the second episode six months after its premiere. It’s the kind of precise audience measurement, influenced by the hypermetrics of the Internet, that simply wasn’t possible in the era of rabbit ears and Nielsen families. Thus, Netflix can better deliver content to viewers where, when and how they want based on Netflix’s extremely quantified relationship with that viewer, providing a killer advantage for both creators and audiences.

That blood on Spacey/Underwood’s hands? You need look no further than the major U.S. broadcast networks, which now have yet another competitor for eyeballs. While recent studies have shown that services like Netflix and practices like “cord cutting” haven’t reached a point where they are siphoning viewers away from traditional television, a TiVO survey of its subscribers found that more than half also had a Netflix subscription. The company has already won the first major battle: penetrating the living room. Now it is focusing on content.

Content is king

Netflix is also already arguably batting 1.000 with the first three of its highly publicized original series:House of Cards, Arrested Development and Orange Is the New Black (not to mention modest niche successes like Lillyhammer and Hemlock Grove). After Oz, The Sopranos and Deadwood had premiered at the beginning of the century, HBO had punched its own ticket as the most serious player for original programming in the premium cable space.

As Netflix continues to remain committed to creative freedom, deliver buzzy shows it will lure Hollywood’s best and brightest. Spacey’s speech this week has not gone unnoticed by the Vince Gilligans or Matt Weiners of the world, and I suspect it will continue to echo with those frustrated by the hoops that have traditionally been involved in getting a television show on the air.

Orange Is The New Black

Orange Is The New Black

Spacey’s critique in his speech of the networks’ “pilot system” – in a sense, a forced audition for those who want to bring a series to the screen – speaks to the larger obstacles “old dog” network and content providers may face, ones they have actually created for themselves.  The concept of a pilot only reinforces the position of traditional networks as a nettlesome mediator of content, an obstacle standing in the way between the storyteller and the audience.

While it is still very early, what we’ve seen since House of Cards premiered shows that things are moving very quickly and all in the favor of agile platforms like Netflix. Netflix is not only agile and data driven on the content side, but its technology platform allows it to quickly deliver content to whatever will be the dominant home entertainment screen in the next few decades – smart TV, computer screen, iPad, Google Glass, or something we haven’t even thought of yet.

Sure, networks like HBO can make digital concessions like providing access to “HBO Go” to non-subscribers, but they are simply trying to beat companies like Netflix at their own game. It becomes even easier for the Netflixes and Hulus of the world when they can easily build their programming into social networks like Facebook, so that they can continue to keep track of those younger eyeballs as they keep peeling away from the boob tube to some version of a computer screen instead.

However, if the networks of the 20th century want to continue competing well into the 21st, they might not have much of a choice. It’s up to those in charge of delivering serialized content to the public whether they are willing to give up the comforts and structure of the old way to better cater to the rock stars of content and the viewers who crave it. Otherwise, that structure might end up coming right down on them like a house of…well, you know.

Chris Adams is Global CEO and Executive Director at Spondo.com.

  1. If Netflix ever gets prime time sports, game over cable.

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  2. In the USA maybe – But there is a bigger world out there and a FRAGMENTED Offering of identical technology on a country by country basis…We have a long way to go

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  3. Hear hear. I was incredibly impressed with Keven Spaceys speech and am looking forward to seeing the industry deliver more fabulous content via platforms like Netflix. It is definitely opening the doors to the creatives and perhaps closing the gap on piracy.

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  4. My Uncle Mason just got an almost new green Saab 9-3 Sedan just by some part time working online with a lap-top… find out here…. http://www.BAR.com

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  5. Very easy for him to rail against pilot system when Netflix gave HoC $100m and 2 years guaranteed. What if HoC sucked? Netflix would look like fools. They were in a position where they needed to make a splash, get buzz, etc, and this is how they did it. They made a bet and apparently it has worked out, but don’t think that justifies other networks doing the same deals.

    Oh, also, if HoC was so successful, why haven’t they released viewer data? The argument that they don’t sell ads doesn’t work because investors want to know what benefit they got from that $100m investment.

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