Hollywood continues to obsess over how to determine whether Netflix’s House of Cards is a “hit” or not, as exemplified by this piece from The Wrap. And with good reason.
There’s an old saying in Hollywood that you’re only as good as your last movie, by which is meant, your value in the marketplace as an actor/director/writer/producer/studio chief/etc., bears a linear relationship to the financial performance of your recent movie or TV projects according to certain standard metrics.
It’s hard to overstate how central the project-based P&L is to everything that happens in Hollywood. Every movie, every TV series, every web short or app, is it’s own profit center. Every dollar spent on the development, production, marketing, promotion, and distribution of content is charged against a project-specific P&L; and every dollar earned from exhibition, advertising, licensing, rental and sale of content is credited to a project-specific P&L. At some point, there is a tallying up, and a movie or TV show is determined either to have made money, lost it, or broken even based on the sum of those charges and credits.
Few people outside the accounting department of the studios/networks may ever see the “real” numbers. But the standard audience metrics — box office grosses, Nielsen ratings, DVD sales and rentals — are generally accepted as reasonable proxies for financial performance, allowing everyone to work from the same scoring system.
Not only are there no audience metrics available on House of Cards (except to Netflix, of course), but even if there were it’s not clear how they would translate to the P&L. Presumably, Netflix has some internal metrics for gauging the return on its investment in House of Cards and other original series, but chances are it doesn’t look like a standard TV series P&L.
In its own way, Netflix’s severing of the linear relationship between audience size and ROI has the potential to be at least as disruptive to how the TV business operates as that its series are delivered via the web.