
Netflix Is Betting Its Future on Exclusive Programming - donohoe
http://www.nytimes.com/2015/04/20/business/media/netflix-is-betting-its-future-on-exclusive-programming.html?smid=re-share
======
fsk
When Netflix first started, they were able to buy the streaming rights to old
movies and TV shows for cheap, because executives thought they weren't worth
anything. Now those contracts are expiring, and the studios want to jack up
the rates or start their own service.

Netflix is also getting squeezed by ISPs like Comcast, who want to charge them
for the right to deliver video to Comcast's customers who already paid for
their bandwidth.

So Netflix' only way to survive is to develop its own content. If it's
dependent on other people to provide content, they'll jack up their prices to
take Netflix' profit margins.

So now you have 5-10 competing services, and if you aren't paying attention,
you don't know what shows are available on what service. Meanwhile, if you go
to a file-sharing website, you can get every single show and movie. So Netflix
(and its competitors) have less compelling of a value proposition, if you have
to pay $10/month to several different services to get all the shows you might
want to watch.

~~~
testingonprod
Speaking of exclusive content, I highly highly recommend Netflix's "Daredevil"
(a TV series they developed with Marvel). It's seriously some amazing content.

~~~
thaumaturgy
Seconded. The fight choreography and photography are as good or better than
John Wick if you're into that sort of thing. That hallway fight scene was
amazingly well done. The casting is quite good too. (Although the actor could
learn a couple of things from Chris Gorham, who did a really great job of
playing a blind guy on Covert Affairs.)

~~~
mercurial
Thirded. Another thing that sets it apart from other superhero shows is that
how, after a while, the series spends time showing the main villain, who gains
a human dimension.

~~~
alessioalex
Forded? The show is pretty damn good. House of Cards is amazing as well.

------
FrankenPC
“It will be like the Yankees and the Red Sox,” Mr. Hastings said. “I predict
HBO will do the best creative work of their lives in the next 10 years because
they are on war footing. They haven’t really had a challenge for a long time,
and now they do. It’s going to spur us both on to incredible work.”

That guy has a ton of class. This war will only benefit all of us
entertainment junkies.

~~~
mortenjorck
No doubt, though there's also a fair degree of hubris in that statement. HBO
is already going strong from a 15-year streak of unprecedented critical
success, having birthed genuine cultural touchstones such as The Sopranos and
The Wire.

Netflix is making an incredible effort to catch up: They're giving great
creative talent a lot of creative freedom, and they've certainly put out some
fine prestige content in their first three years, but even House of Cards
isn't really batting at the same level as HBO's landmark achievements.

I think when Hastings says "I predict HBO will do the best creative work of
their lives in the next 10 years," there's a tiny bit of projection there – he
knows HBO will have to _continue_ to put out landmark content because sooner
or later, Netflix will indeed have its own, bona-fide Sopranos.

As a fan of long-form episodic cinema, no other rivalry could make me more
excited.

------
pinaceae
I guess there is another, very big reason: The Non-US markets.

The US is surely important, but Netflix has launched in Europe and faces a
huge obstacle that very few US Americans know about - rights licensing is far
worse.

Selling content overseas is a huge business, which means a giant time delay
until something makes it to, say, Germany (even if not dubbed). Which worked
in the past, but the Internet is forcing real time usage, see the piracy
numbers worldwide for something like Game of Thrones (HBO, I know). There is
practically no legal way to easily consume something like GoT the same time as
it is aired in the US.

Not so for Netflix' own content.

House of Cards, Daredevil - all already available globally.

The world is a big place and Netflix is going after it, the US is just one
market.

That HBO/Apple TV deal better be global soon.

~~~
sschueller
Netflix is making the same mistakes. They sold the rights of "House of Cards"
to Sky Television preventing anyone from watching season 3 in most of Europe.

~~~
panglott
Does House of Cards licensing have anything to do with the fact that it was
originally a UK show?

~~~
tobylane
Probably not. BBC made the UK series, GP says Sky licenced the US series.

------
ChuckMcM
Netflix is well on its way to becoming the first of the 21st century
"networks". When you think about a television network it plays re-runs of old
shows, re-runs of old movies, movies that have come out of theatres, and
original series.

The only difference between Netflix and say "TNT" or "FOX" (other than they
don't have news shows) is that the content is available on your schedule, not
the networks, and they don't put advertisements in their content they just
charge you a monthly fee to have access to it.

They have, nominally 60M subscribers[1] world wide, and 40M in the US[2], out
of a total of 113M TV households [3]. If half of their subscribers watched the
series Daredevil (which I recommend) that would be the equivalent of Netflix
getting a 20 rating. [4] That would be equivalent to a Seinfeld [ibid] which
was NBC's hottest show for a very long time.

So what that means is that networks need to either adapt to this new model or
die. And the more that die, the more content there is for folks like NetFlix.

Oddly enough, this sort of makes Roku the new Comcast :-)

[1]
[http://www.forbes.com/sites/laurengensler/2015/01/20/netflix...](http://www.forbes.com/sites/laurengensler/2015/01/20/netflix-
soars-on-subscriber-growth/)

[2] [http://variety.com/2015/digital/news/netflix-
tops-57-million...](http://variety.com/2015/digital/news/netflix-
tops-57-million-subscribers-in-q4-as-u-s-growth-slows-1201409712/)

[3]
[http://www.tvb.org/media/file/Nielsen_2014-2015_DMA_Ranks.pd...](http://www.tvb.org/media/file/Nielsen_2014-2015_DMA_Ranks.pdf)

[4]
[http://en.wikipedia.org/wiki/Nielsen_ratings#Commercial_rati...](http://en.wikipedia.org/wiki/Nielsen_ratings#Commercial_ratings)

~~~
XorNot
The only problem is they're in the middle of having one of the better measures
to end piracy be thoroughly dismantled. Consumers are not going to pay 10
different streaming services on a contract fee structure.

And it's pretty clear that's not the only problem: once they think they can,
we'll be back to product lock in, region lock in, vendor lock in "our new show
is perfect to get people to switch to Comcast!"

------
tuna-piano
Netflix has shown an ability to think of the future and adapt. Congrats to
them. They started mailing DVDs, went full force into streaming old TV shows
and movies, and now are pivoting again towards exclusive programming.

As a side note, it wouldn't surprise me if they are deeply concerned about an
Apple TV service with a similar interface as Netflix, but more / better
content. When I hear Tim Cook talk about his ideas for TV, it seems like he
hates the current way TV works. Most programs aren't live, but are still shown
the way they were 50 years ago for no particular reason.

~~~
Ntrails
Apple TV has a very very long way to go.

Pro: i'm watching twitch stream of pro-dota on my phone, there's a new menu
I've not noticed before. Press it, click apple TV, it's now streaming
seamlessly onto my TV. Similarly for any tv shows on my laptop - but only if
they're .mp4 (ugh).

Cons: Awful menu and navigation. Comparatively expensive (assuming you're
watching films - after 2 films you could pay for a streaming service). Search
is bad and slow. Recommendations are all the same despite allegedly being
split by genre. etc etc. It's barely better than any other smart TV to be
honest.

I think Apple TV could work, but I don't think it's even close to being there
yet

------
hkmurakami
Seems like they're following in the footsteps of HBO, going from a
distribution channel rebroadcasting others' content to being known primarily
for their high quality original content.

I like where this is headed. The competition will be a boon for content
consumers.

~~~
imh
The problem is that I pay for netflix precisely because they rebroadcast
others' content.

~~~
booruguru
Yes, but eventually they'll make enough of their own content you wont care if
they carry anyone else's stuff.

~~~
Touche
You'll care when you have to subscribe to 8 different $9.99 services to get
all of the content you want.

~~~
josephagoss
I'm hoping Netflix gains enough market share with their original programming
that it becomes suicide for other producers not to list their shows on Netflix
too.

Even if to pay for this Netflix has a premium version... ($20 per month for
example)

------
drawkbox
Content is king and Gates was right: [http://www.craigbailey.net/content-is-
king-by-bill-gates/](http://www.craigbailey.net/content-is-king-by-bill-
gates/)

 _Content is where I expect much of the real money will be made on the
Internet, just as it was in broadcasting.

The television revolution that began half a century ago spawned a number of
industries, including the manufacturing of TV sets, but the long-term winners
were those who used the medium to deliver information and entertainment.

When it comes to an interactive network such as the Internet, the definition
of “content” becomes very wide. For example, computer software is a form of
content-an extremely important one, and the one that for Microsoft will remain
by far the most important.

But the broad opportunities for most companies involve supplying information
or entertainment. No company is too small to participate._

------
nevster
Heh - being Hacker News, I thought this was going to about some new
methodology like Extreme Programming!

~~~
optimusclimb
Haha - I too immediately thought there was some new programming paradigm I had
missed out on!

------
jonathansizz
I'm wondering why Netflix don't make a few topical shows, which could
potentially increase the loyalty of their subscribers and would be very
inexpensive to produce. Having their own shows similar to the daily and weekly
shows on Comedy Central and HBO would add a new facet to their offerings.

~~~
TwoLeaves
They have indeed recently commissioned a "topical talk show"
([http://www.nytimes.com/2014/06/20/business/media/chelsea-
han...](http://www.nytimes.com/2014/06/20/business/media/chelsea-handler-to-
host-late-night-style-talk-show-on-netflix.html)).

------
aidenn0
About 2-3 years ago, I said NF couldn't do what it is doing forever, as there
is nothing preventing e.g. Disney or Time Warner from selling their content
direct to consumers.

Obviously the netflix executives were ahead of me on this one.

~~~
rhizome
It takes much longer to steer a huge ship, or however that saying goes.

~~~
aidenn0
That's kind of what I'm saying; it's clear now that when I made that
prediction, NF had already started going after original content.

~~~
rhizome
Idealistically and technologically there was nothing preventing them from
streaming directly, but realistically they had decades of contracts to re-
engineer to do so, not to mention the fact that they are huge companies with a
fundamental stability that prevents them from innovating.

From somewhere else (via NFLX Wikipedia):

 _In a 2010 New York Times interview, Time Warner CEO Jeffrey Bewkes
downplayed Netflix as a threat to more traditional media companies. Bewkes
told the newspaper, "It's a little bit like, is the Albanian army going to
take over the world? I don’t think so." At the same time, he recognized that
the company's DVD service may have contributed to a decline in DVD sales, and
regarding the industry's willingness to make special deals with Netflix in the
future, he added "this has been an era of experimentation, and I think it's
coming to a close."_

~~~
aidenn0
Oh, I see what you're saying now; the "large ships" are the current content
holders.

I agree, and this is why netflix has time to build up a library of original
content. It's bootstrapping its success off the backs of its future
competitors. I will predict though, that when Disney's current contract with
netflix expires (2020ish IIRC), they won't renew.

------
ams6110
I don't watch any broadcast or cable TV anymore. Netflix and Amazon Prime
video are it (and Prime only because it's bundled; it doesn't really offer
anything I'd pay for on its own). This seems like a no brainer to me.

------
deegles
Netflix could pivot slightly and offer white-label hosting of content for each
content provider. Spinning up a hosting service to compete with Netflix can't
be cheap.

~~~
TheCondor
I believe mlb does exactly that

------
dollaaron
> "They will take HBO linear and call it HBO Linear,” he said. “That is HBO if
> you really want to watch it on somebody else’s schedule.”

Am I the only one who likes shows being made available once a week, rather
than all at once?

~~~
FreeKill
Is that because you don't trust yourself not to watch it all in a binge
situation? The shows on netflix could easily be watched one episode at a time
on a regular schedule if that's what you prefer. You get both options (and
hundreds of other scenarios) instead of just the one decided by someone else
(or else having to record it on a DVR to make your own schedule).

~~~
dollaaron
It's nice to know that the other people watching a show are also at the same
point as you are (or relatively close), allowing you to speculate on what
might happen next in the time between episodes.

I also like looking forward to the next episode, which doesn't really happen
when you can watch that next episode immediately (and self imposed waiting
doesn't feel the same).

~~~
FreeKill
I agree that one thing that's lost is the ability to discuss episodes with
people as a show progresses. Since you never know what episode a person is on
you can't really risk discussing things until you're sure the person has
caught up. With weekly shows like Game of Thrones for instance, you can feel
pretty comfortable discussing an episode amongst other fans. Not sure if
that's really something I'll miss when it's gone, but it's definitely a big
change with Netflix that ultimately started as a smaller disruption with DVR
devices...

I suppose personally my feelings on the matter is even though I might lose the
few advantages that you mentioned, the disadvantages far outweigh it and I
won't miss the airing of shows like Breaking Bad or Suits that took one season
and split them in half with gigantic gaps in between (months or even years),
to the point where you can't even remember where the show was going by the
time it returns. I like the freedom to watch at whatever schedule I prefer,
without any kind of arbitrary limitations that may or may not suit my
lifestyle at the time, and the confidence to know I'm going to be able to see
a story through from start to finish once devote time to it...

~~~
brc
Well there is a product/service in there. Discussion channels tied in with
your Netflix Id so that you you can only discuss topics with people on the
same schedule. You could also join a group which had the programming pre-
determined, and drip fed the shows to you on a specific schedule, like every
Sunday night. You get the benefits of a scheduled delivery of content and
associated social benefits, but you also get to join a schedule which suits
your times.

~~~
danielbln
Reddit works well for that. The House Of Cards subreddit for example features
a thread per episode, which has pretty much replaced my per-episode
watercooler talk.

------
jasonkostempski
TL;DR Not a new paradigm where you define the functionality you don't want and
a compiler gives you the "program" you do want :(

------
shmerl
I wish Netflix would provide _their own_ content DRM-free. But they don't, so
all their claims that it wasn't their interest to push DRM into HTML are not
true.

------
mattmaroon
They will never call it HBO Linear because they aren't bad enough at branding.
That's almost as bad as Qwickster.

------
paulajohnson
And here I thought I was going to learn something about their software
engineering.

------
ctdonath
Whither the "long tail"?

------
dschiptsov
Exclusive is some new fresh post-Reactive bullshit?)

