
Disruption by Netflix Irks TV Foes - aaronbrethorst
http://www.nytimes.com/2016/01/18/business/media/disruption-by-netflix-irks-tv-foes.html
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creamyhorror
This is an interesting snippet that no one else seems to have addressed:

 _Meanwhile, Mr. Landgraf said on Saturday that FX pursued “Master of None”
and Netflix’s coming show, “The Crown,” but the free-spending streaming
service “overwhelmed us with sort of shock–and-awe levels of money and
commitment.”

FX, he said, has to be profitable whereas Netflix does not have to worry about
that now.

“I mean, basically, we are competing against payrolls à la the Oakland A’s and
the New York Yankees that are three, four times ours,” he said.

He called it a “little frustrating” because “FX’s earnings alone are many,
many times higher than Netflix’s globally, many times higher.”_

If I read this right, Netflix is basically coasting on investor money, while
FX is earning much more money but because FX has to be profitable, it can't
afford to be as profligate as Netflix with its content production costs. Nor
can it afford Netflix's asking price for its shows.

Basically, is investor money is propping up Netflix and distorting the market,
same as in other tech-disrupted markets?

edit: I was wrong - Netflix is indeed simply reinvesting almost all its
revenue (largely into producing shows), rather than relying on investor money,
as petra says. So FX and other networks should consider recalibrating their
strategy to focus on higher-quality content production, if the market is
rewarding that.

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petra
Netflix has tiny profit margins , since it uses most of it's money for growth.
But it's not investor money, and they're not losing money, so they might be
able to do so for a long time, like Amazon.

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CodeWriter23
Why would Netflix release rating numbers? It's not like they are trying to use
metrics to determine the price of advertising slots. The only scenario I can
envision where that would help Netflix is in some potential future dust-up
over net neutrality/ antitrust issue with ISPs that deliver TV programming.

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criddell
I think the reason they are being called out on this is because they are
claiming that their shows have more viewers than the biggest shows on cable.
It seems fair that if you are going to make claims about your viewership, you
should expect to be asked to back that up with numbers.

That Netflix is thinking about ratings scares me a bit because that suggests
advertising is on their minds.

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CodeWriter23
If Netflix ever brought in ads, it would be for a lower cost subscription
rate, perhaps free but I doubt that. They know the wrath of their users who
unsubscribe en masse when they screw up.

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x5n1
Ads are immoral. Netflix needs to redefine the world by never bringing ads to
consumers. Never!

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dudul
How is ratings relevant in on-demand model? Isn't it gonna change literally
every day? I'm sure there are still people watching older shows on Netflix.

The tough days are coming for Netflix. Everybody realizes they are putting
down older, irrelevant cable TV networks (including these networks). They will
be bullied and criticize beyond reason in an attempt to preserve the status-
quo. Hope they can take it.

~~~
manish_gill
I mean, youtube videos have viewership numbers, and we judge youtube content
accordingly all the time. I don't see why Netflix can't do the same, or why
it's not acceptable for that data to be released for a streaming site.

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lhopki01
You're forgetting the reason why viewership numbers exits. They're for
advertisers. The only reason you need them is to have advertisers. The reasons
they're public is that advertisers don't like trusting the company selling
them ad space to also be the one saying how many viewers there are. That's why
independent viewer number companies started. Netflix has no advertising so it
doesn't need to release numbers. Youtube and TV both need viewing numbers to
survive. Netflix doesn't need that data to be public.

~~~
rhino369
Well it might need to release that data to convince shareholders that all the
money they are spending on original content is worth the hundreds of millions
a year they are spending.

It's hard to tell if Netflix's growth is because 1) the huge catalog of rerun
content they purchase for pennies on the dollar or 2) the original content
they create for dollars on the dollar.

The viewership data sheds light on that. If only three million out of 75
million watched House of Cards? Then they better stop spending 100 million
dollars a year on it, because it's not worth it.

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jeremy7600
Except it doesn't matter because people aren't paying for the shows with the
ads they watch. They are paying directly with their subscription money and
Netflix can spend it any way they want. So what if only 3 million out of 75
million watch house of cards. How many shows are watched on netflix by 100% of
subscribers? Or I'll even make it more fair: how many shows are being watched
by more than even 10% of subscribers? Few to any, if at all. They pick up what
they can afford. It doesn't matter if no one watches it, its already been paid
for. (More or less, the cost is already sunk but the revenue continues if they
buy properties or not. They would be even more profitable if they didn't buy
any content)

~~~
rhino369
Of course it matters to Netflix. They want to spend their money efficiently.
It's possible spending on original content doesn't have a positive return on
value.

~~~
lhopki01
I think currently Netflix has other priorities than spending money
efficiently. They want growth first.

Years from now when they're a monopoly provider like cable is they'll
concentrate on spending their money wisely and we'll all be bitching about the
subscription fees.

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touristtam
So traditional network are getting itchy about a new competitor that refuses
to play by their rules while beating them at their own game (produced show).
It reminds me of HBO debut.

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kenshaw
> [Gary Newman] also said that the numbers were “within the mid- to upper
> level of cable dramas and within the ballpark of what I’d expect.”

So the agencies that are paid to do research / competitive intelligence and
rate a competitor's viewership numbers using a highly biased sample pool using
a method (audio sampling) that is highly unreliable and wildly inaccurate (so
much so, that for all intents and purposes, it should be classified a divining
rod), has reported _exactly_ the numbers that the TV Network execs _expect_
\-- numbers that color network TV as still favorable for advertisers? Well,
I'm amazed.

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justinsaccount
What the fuck is this?

> Mr. Wurtzel provided data from a firm named Symphony Advanced Media, which
> uses audio content recognition installed on phones to recognize what is
> being watched and when. According to Symphony’s data, the Netflix show
> “Jessica Jones” was viewed by 4.8 million people [...]

[http://www.symphonyam.com/technology/](http://www.symphonyam.com/technology/)
apparently...

edit: ah, I found [http://observer.com/2016/01/netflix-hulu-data-symphony-
advan...](http://observer.com/2016/01/netflix-hulu-data-symphony-advanced-
media/)

> The company has over 15,000 viewers now and expects to hit 20,000 media
> insiders this year

So they have 15,000 people running their spyware and they extrapolate the data
out to 4.8 million people.

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hobs
I don't know how robust their sampling method is, but how many samples do you
need in a survey to do that level of extrapolation? I was under the impression
that the political surveys extrapolated with less than this.

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cdumler
The answer is: it depends.

I remember the lesson my Stats teacher: How many Martians do you have to
measure to determine the average height of a Martian? What if I told you that
all Martians are exactly 6 feet tall?

The correct way to sample to is to determine the variance in the population.
If there is no variance, sample size needs to be only one. If not, there are
statistical charts that tell you what your sample size needs to be to have
some specific confidence that some percentage of the time your sample will be
representative. If your population has a Normal distribution, you can use a Z
chart to calculate sample size.

Believe it or not, for normal distributions and command variances, a
population below 200 is all that is necessary.

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jeremy7600
Wow, that journalist just took everything everyone said at face value and
didn't even question the speculations made on both sides? Shoddy. How does
someone at Fx know anything about what goes on at Netflix? Besides the
commonality of showing video content, the two are as similar as peaches and a
sailboat.

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Shivetya
why would Netflix need viewer ratings? They know exactly what you are watching
but most importantly they are a paid service where each of their customers
voluntarily chooses to pay for Netflix's content. If anything ratings for
individual shows would only serve Netflix's interest so as to know if one show
is worth producing over another.

They aren't in the same business as traditional TV/Cable where the customer
doesn't get a choice but instead has to take whats in the bundle. If anything
they are closer to HBO

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pmontra
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