

Netflix Gets Into The Original Content Game, Buys Upcoming Show For $100m - joshbert
http://techcrunch.com/2011/03/15/netflix-gets-into-the-original-content-game-buys-upcoming-show-for-100m/

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tomrod
If anyone at Netflix is listening:

BUY FIREFLY AND MAKE NEW EPISODES.

I would gladly play an extra $4 a month (or more) on top of streaming just for
access to new weekly/biweekly episodes of that.

~~~
smokinn
That's probably an expansion path being considered. There are plenty of series
that have had big cult success after their cancellation. Firefly is one of
them but there's also Arrested Development and, more recently, Better Off Ted
for example. Letting others take the risk and capitalizing after proven market
viability (basically picking up half of what Fox cancels) could be
interesting.

~~~
georgekv
Stargate Universe & The Sarah Connor Chronicles come to mind for me. Both went
under just as they were hitting their stride IMO.

~~~
tomrod
I guess grad school really is a bubble. I had no idea they canceled SG:U.
What's this Sarah Conner Chronicles I'm hearing about?

~~~
georgekv
(<http://www.imdb.com/title/tt0851851/>)

FYI, it supposedly fell somewhere between the T2 & T3 movies in the timeline.
Mostly good episodes with the story picking up (and frankly getting crazier in
a good way) by the second season.

It's worth a watch if you can handle knowing you won't get all the answers due
to its cancellation.

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jakarta
Original content is a natural evolution for Netflix. Look at most of the pay-
tv channels (HBO, Showtime, now Starz). All of them started as just ways to
monetize existing content but realized that original content could make them
more money and boost subscribes while reducing churn.

This is why Chris Albrecht (the new CEO at Starz) is pushing for original
content. They've tried a couple shows so far (Spartacus, now a show about
Camelot) and continue to be moving ever increasingly in that direction.

To those of you who are complaining about it only being one show or that it is
going to be too narrow of an audience, sure. But to me this is Netflix just
dipping their toes in the original content game.

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ZachPruckowski
They're gonna need a lot more than one show if they're going to try to use
original programming as a reason to buy Netflix - 13 episodes a year means
weekly for 3 months. They're going to need at least 3 shows to do yearly
coverage (they can have breaks in between). If the original programming is the
reason you buy Netflix, you won't pay year-round if they don't have year-round
programming, you'll just binge on TV six months of the year and cancel for the
other six months (and if it's not the reason you're paying for Netflix (and/or
upgrading to the next tier or whatever), then it's a waste of their money).

I think two things will help them. The first is that they have no competition
in their timeslot, because they'll have no timeslot. The second thing which
will help them is that they can break a lot of TV rules in ways even HBO can't
- they're less restricted in episode structure or length, for instance.

~~~
stanleydrew
First of all, people don't often cancel once they are getting something.
That's why those CD-of-the-month club things worked in the 90s, and book-of-
the-month before them.

But I'm not even sure that's important. I don't think the goal here is to
directly make money on new subscriptions. This is a massive strategic move.

It sends a signal to content providers that Netflix, if need be, can cut them
out of the picture, or at least can make things very expensive for them by
bidding up the price of content.

~~~
gigawatt
I think it's more of a message to Amazon that just streaming a few thousand
movies won't be enough to steal the market from them. Amazon is great at
breaking into new areas, but I think they would have to think twice about
moving into television production, given that it's so far outside their
sphere.

~~~
chopsueyar
That's what "they" said about Netflix.

~~~
gigawatt
I think "so far outside their sphere" was poor word choice on my part. What I
was trying to say was that, for Netflix whose sole business is delivering
movies and tv shows to consumers, moving into TV production is not a stretch.
For a company like amazon, who already does so many disparate things, to now
add something so monolithic as TV production might stretch them in
uncomfortable ways. I'm an enormous Amazon fan so I don't put anything past
them, but this is kind of a double-dog dare on Netflix's part, in my opinion.

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jerf
There is an alternative interpretation of this play, which is that it is
primarily a chess move. Demonstrating that they have the capacity to route
around the content providers if necessary means that the content provider's
negotiation position is thereby weakened. It may be the case that if they even
so much as put out a _credible_ series this will easily be worth $100 million
to Netflix just in reduced content-provider-negotiation-position. Of course,
the content providers will see that as well and react in their own ways (as
always), but it's an interesting play.

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ZachPruckowski
Full Link: [http://www.crunchgear.com/2011/03/15/netflix-gets-into-
the-o...](http://www.crunchgear.com/2011/03/15/netflix-gets-into-the-original-
content-game-buys-upcoming-show-for-100m/)

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ojbyrne
I just don't see that working. It's a classic British show dominated by one
impressive and charismatic actor and just won't translate to american
audiences (it's all talking, no action, everything is implied rather than
pushed in your face). "Edge of Darkness" which was a huge Mel Gibson bomb
seems like the closest analog.

I highly recommend the original BBC show.

~~~
alexqgb
By the same token, there's NO WAY a movie about nerds taking depositions for
two hours would EVER go anywhere. Ever.

("Humm," says the studio, "is it shot in 3D?" "No, it's shot in brown.")

~~~
ojbyrne
As a matter of fact, I thought of that movie as I was writing the comment. I
could have added "however The Social Network might be the exception that
proves the rule."

~~~
alexqgb
For what it's worth, they're both by David Fincher. I have to admit, I'd also
be pretty skeptical if if were anyone else.

And you're right about the original. It is SO insanely good.

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r00fus
Can someone explain to me how netflix is in a good position when all major
broadband providers are looking at throttling and/or caps?

When all the major ISPs are also selling their own video content, how can
Netflix continue to compete?

~~~
kjksf
Throttling (to the point that it degrades the quality of online video) or caps
will mostly work against ISPs. Sure, netflix uses a lot of bandwidth, bo so
does youtube, hulu, TechCrunch TV or Khan Academy. The online video is here
and will only grow, so ISPs will have to get on with the program or face
backlash from their users.

If ISPs target netflix specifically, there will be PR disaster for them,
possible anti-trust investigation from the government and a likely lawsuit.

ISPs are not even a blip on the radar when it comes to selling video content
so today Netflix has a clear value proposition: it's a cheap (about 10x
cheaper than cable) access to a lot of online video. Netflix's strength is
that it's content producer-agnostic. ISPs that are also cable providers can at
best offer ability to view via internet their cable programming. Except
they're not doing it, it would still be 10x more expensive, they cannot offer
anything else that is not part of the cable subscription and probably they
can't even offer time-shifting (without re-negotiating contracts with content
providers).

~~~
warfangle
Will it really work against the ISPs? I have three choices in my area: 768kbps
- 1mbps adsl through Verizon, 15mbps (nominally, typically 3mbps during peak
hours) cable through Cablevision, or 3-6mbps high latency Clear 4G.

Not sure how the third option would hold up for streaming netflix - the first
definitely would not.

So really, I don't have any choice about it, so I have no leverage. So capping
it won't work against my ISP until they cap it below the other options.

~~~
jerephil
Depending on the area Clearwire works fine for streaming Netflix. I've used it
to stream Netflix in NYC, Tampa and Seattle without issue.

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Qz
I wonder if doing it this way will be cheaper for them in the long run than
trying to buy the digital rights later from the content cabals.

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jcl
Actually, Netflix produced and distributed original content on a limited scale
several years ago, through their Red Envelope Entertainment division. Then
they shut it down "to avoid competing with their studio partners". :)

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pkadakia
This is a really interesting move given that Netflix has traditionally tried
to push people towards lesser known content. In fact, they don't make that
much money on people using Netflix for blockbusters but are much better off
with the recommendations. It's a bit odd that they would go for a big name
celebrity for their first owned series. This may just be a way to get a foot
in the door, and then buy lesser known series for a lot less and push new
content in a way we've never seen before.

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mildweed
This is not a part of their core competency. I don't see how this is a good
move. If they had bought 10-20 shows, that's a different story...

~~~
meterplech
I don't get it- you are right, this isn't part of their core competency. And,
that's why they were smart to only buy one show, with two big names attached
to it. They are reducing their risk and seeing if they can play in the content
game. If yes, they will likely buy a few more shows and grow that competency.

~~~
ankeshk
Actually they are not reducing their risk by keeping the number of shows low.
Here is why:

Upto 211 degrees, nothing happens. At 212 degrees, water boils.

Similarly, will 1 good show make a lot of people subscribe to Netflix? Even if
the show is orgasmic - I doubt it. There is no momentum here. No tipping
point. 2 shows won't do it either.

I don't know what the minimum number of new shows is that would get a lot of
folks to subscribe. But for myself, I would put it near 12 or so.

If Netflix wanted to reduce their risk, they should have targeted niches that
are not so expensive. Mainstream entertainment is not a good idea to start
with. Something like History channel or World Travel is.

But going with low risk niches, would not generate so much publicity for them.
Would not make the studios and cable companies take notice. Netflix is in a
fight with them - and so this is a strategic move to get noticed. Not a risk
reduction move.

~~~
true_religion
Netflix is not trying to grow their subscription base.

The "risk" to which he was referring to is the risk of the show failing
completely by some metric (e.g. no one currently subscribed to netflix is
watching it), and all that money being effectively flushed down the drain.

It's the risk of going overbudget. Or the risk of actors and directors having
a falling out.

There's dozens of factors that go into making a show successful and this test
is to see how Netflix as a company can handle them--either directly or by
proxy. If this test is reasonably successful then _maybe_ in the future, they
will make a play to have original content garner them more subscribers as a
competitor/partner to say HBO or Showtime.

~~~
ankeshk
Thanks for making some good points.

You've listed down 3 risks.

\- Risk of no one watching.

\- Risk of going over budget.

\- Risk of actors or directors having a fall out. (Or something else occurring
that makes episodes not coming out on time if at all.)

And you make a good point that thats why Netflix is trying with 1 show and not
10.

But aren't all these risks you listed further minimized by experimenting with
a $10 million show than a $100 million show?

My thinking is: Netflix does not care about risk at all. If they wanted to
minimize risk, they would have gone with lower priced shows. Or they would
have gone with a lot more shows. The only reason they have gone after a high
priced mainstream show is as a negotiation tactic. To make a stand against
studios and cable companies. "Play ball with us. Because if we can't play
together, we will compete together."

~~~
true_religion
I think Netflix isn't trying to minimize the risk, but rather "test the
waters" as it were to see what level of risk exists.

It's more of an experiment than a business strategy.

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ck2
Is netflix going to start having premium, extra-charge selections?

I won't mind as long as there is no tricking you to select stuff that costs
more vs the all-you-can-eat stuff.

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bmelton
This makes sense.

I remember a few years ago Mark Cuban had posted his idea for the 'new'
content delivery model -- where he was going to produce original content and
own the entire delivery chain from filming to DVD to rentals to theater
distribution. His idea was that, in the age of 70+ inch televisions and the
advent of the home theater system, many people don't get much bang for the
buck in going to crowded, noisy theaters when they get an equal or better
experience at home.

In support of that, he was going to film movies that one could, for example,
watch at home (for an increased rental fee) on the same day it was being
released in theaters.

I was just talking with my wife the other day that this idea has apparently
fizzled out, as I haven't heard much about it since then, and that's a damn
shame. Hopefully this gets us closer to that objective.

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cookiecaper
This has the potential to make relations with other content producers a bit
stickier, and I'm not sure if that's really good considering that the media
industry is terrified of the internet anyway. Netflix has built its business
as a supplier -- now they're competing with their vendors.

