
Kevin Spacey on the potential of Netflix to disrupt traditional TV [video] - wiremine
http://www.businessinsider.com.au/everyone-in-the-tech-and-tv-industries-is-passing-around-this-speech-by-kevin-spacey-2013-8
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nrivadeneira
Kevin Spacey clearly gets it. Rampant piracy is an indication of a failing
business model. It's not that people aren't willing to pay, and that's
evidenced by the success of Netflix and shows like House of Cards. Same can be
said of Steam's game distribution model. Give people what they want, how they
want it, at a fair price, and you'll surely be able to make money.

~~~
clebio
I like the message -- and the messenger in this case -- a lot. Having read the
full transcript of his speech, I'm trying to imagine what he might have left
out, what his opponents will use to dismiss this event.

Off-hand, the easy out would be that 'giving people what they want' is
actually pretty costly. The steep pilot culling selects for mass appeal. If
80% of the (paying) viewing public like a pilot, it's probably a low-risk
venture with pretty predictable rewards. If those returns (ROI) are sufficient
to keep the studio running, do the people writing the checks really care that
more niche products _might_ gain slightly better rewards?

~~~
ballard
Yeap. Locking it all away for an absurdly high price or just giving it all
away are suboptimal. Charge a "no brainer" price that most people won't have a
problem with is supply meeting demand more optimally... For potentially
_higher_ profits.

------
avalaunch
_For example, Spacey says there will be 146 pilots made this year at the cost
of $US300-$US400 million. Only 56 of those will actually be made into a
series. “That makes our House of Cards deal for two seasons really cost
effective,” Spacey says in the speech._

Of course it seems cost effective when the show is a big hit. But had it been
a flop, it would have seemed a colossal waste of money - something that could
easily have been surmised with a much smaller investment. For Netflix's
strategy to work, they'll need to be able to continue to pick winners at a
much higher percentage than the traditional television network has been able
to. To do so they'll need to have content producers that understand what it
takes to tell a good story. I think the downside is that this high risk
strategy is likely to make them more risk averse in the shows that they choose
to produce. They'll be a lot less likely to invest in first time writers,
actors and directors. And they'll probably shy away from any story that is at
all experimental in nature.

~~~
shazzdeeds
This is a good point. A company should not be expected to just throw a bunch
of shows out and see which ones stick. Too expensive.

What stuck out to me most in the speech was Kevin Spacey's quick mention of
Netflix's response to the pitch: "We ran the numbers and we think our customer
base would like it".

Media outlets thinking of taking the all-in approach will need the technology
to calculate and hedge the risk . Netflix clearly has that in place, and it
helped convince them to take a chance.

~~~
hershel
It's even better for netflix. They has the technology to allow directing
decisions , small and big, be decided by data :

[http://gigaom.com/2013/07/25/at-netflix-big-data-can-
affect-...](http://gigaom.com/2013/07/25/at-netflix-big-data-can-affect-even-
the-littlest-things/)

------
shmerl
However it's not a DRM free streaming model. So it's not much healthier than
other types of restrictions - it's still DRM. Some truly DRM free streaming
should emerge in the face of all these Netflix-like DRMed barbed-wired
gardens. Streaming should be a convenience, not a way to restrict copying.
Others brought Steam as an example - for Steam, there is competing GOG which
is DRM free and proves the point that DRM free gaming without regional
restrictions and other such junk can be successful. So what is there for
Netflix?

Also, I didn't get his point about the music industry. Most music is easily
available DRM free, _unlike_ video.

~~~
methodin
I don't think most people expect DRM-free content when paying for a
subscription model - I know I don't. I'm paying for the right to access that
content when I want as long as it's available but I am under no assumption
that I assume the right to take that content with me and do with it what I
please. That type of content is completely different than what this streaming
model represents. Netflix is surely on a better trajectory here than other
providers, no?

~~~
shmerl
It's not better as long as there is DRM in it. Why can't you expect to get the
content with you? You can expect paying for titles some one time fee. Not
unlike music and games. Streaming is just a way of accessing it from the
"cloud" without the need to download it first. But why should it prevent you
from downloading if you want to back it up, take it with you somewhere where
you have no access to the cloud and so on? There is no good reason for
"subscription model" in the digital world which restricts your ability to
copy. Buy and use, that's what it's supposed to be.

~~~
smtddr
_> But why should it prevent you from downloading if you want to back it up,
take it with you somewhere where you have no access to the cloud and so on?_

That's the real problem; that internet is not accessible & free everywhere. I
think DRM is fine as long as I can access my media anytime & anywhere on all
my devices. Netflix pretty much fits this requirement aside from the hack of
Linux+Netflix. The issue that internet isn't available to every human being or
costs a ridiculous amount of money is a problem that needs to be fixed. I want
to be able to say "Everyone has internet these days" and _really_ mean it for
all people of the world. We need to make it impossible for anyone to make the
argument _" but what if I don't have internet access?"._

~~~
shmerl
_> I think DRM is fine as long as I can access my media anytime & anywhere on
all my devices._

I think DRM is never OK. Not only because of privacy and ethical issues, but
because if you can't fully control the content and the service which issues
DRM closes down you would simply lose everything you paid for. It should be a
deal breaker. Then pirating that content will be the only option to get it
back. This Xkcd applies to video pretty much the same way as to audio for
which it was made: [http://xkcd.com/488](http://xkcd.com/488)

~~~
smtddr
Unless we're talking about Win8-BIOS-TPM stuff(which I don't clearly
understand just yet), I don't think proper(non-remote-controllable) DRM is a
privacy concern. I'm not sure how it's an ethical concern either. But, I do
think that if the DRM servers and/or media streaming servers are going offline
and making the content disappear forever they should allow it to just be
downloaded without DRM for free - since turning off the servers implies
they're done making money off it(?).

~~~
shmerl
When Netflix (or any other DRMed code) runs on your machine, it runs as a
black box for you. Why isn't that a privacy concern and why should it ever be
trusted? It's unethical because it's an overreaching preemptive policing, but
it's a long subject.

 _> do think that if the DRM servers and/or media streaming servers are going
offline and making the content disappear forever they should allow it to just
be downloaded without DRM for free_

They may be "should" allow it, but they will never do at that point. They have
more important problems to care about when they close down. So it's our
obligation as responsible users to demand DRM free content from them right
away, and avoid those who refuse to sell such.

~~~
smtddr
Okay, I think I see what you're saying about the decryption binary blob. With
all this Ed Snowden stuff, it would not be unreasonable to have some suspicion
of any network-software that has a wide user base. Netflix-app would be a good
place to have a government backdoor...

Then how do we deal with piracy? Is piracy even a problem at all? I guess if
iTunes is selling music without DRM and not falling apart, then we think TV-
shows/movies can do the same?

~~~
shmerl
_> Okay, I think I see what you're saying about the decryption binary blob.
With all this Ed Snowden stuff, it would not be unreasonable to have some
suspicion of any network-software that has a wide user base. Netflix-app would
be a good place to have a government backdoor..._

No need even to go so far. DRM by definition implies that they don't trust
you, the user. So, I see no point to trust them in return. It's normal to
assume that DRM is always a risk of privacy violation. Surely, it's a good
ground for sinister abuses like your example as well.

 _> Then how do we deal with piracy?_

DRM doesn't deal with piracy. Publishers and distributors don't even hide this
fact these days. So what are they using DRM for? Guess yourself, but expect
nothing good in there.

The recipe for dealing with piracy is ages old - increase quality to be
competitive. I.e. some part of piracy which can be affected is caused by the
fact that pirated content has higher usability (no DRM, regional restrictions
and other such junk). By releasing quality products while being DRM free and
delivering them with high level of convenience, distributors can compete with
that sector of piracy. The segment of piracy which is caused by people being
crooks and getting free stuff won't be affected at all. DRM doesn't affect it
either.

~~~
bluntly_said
I think you're being too black and white here.

I agree with you in principle on a LOT of the points, but the real issue is
that most content producers (publishers are a different issue...) would LOVE
to be able to do this:

"The recipe for dealing with piracy is ages old - increase quality to be
competitive"

But realistically it's fucking HARD. Mainly because increasing quality to be
competitive with piracy would generally require breaking tax and import laws
everywhere.

Even if it doesn't require breaking those laws to be competitive, you have to
at least pay enough people to be aware of them, for each and every country you
want to be able to distribute your content in.

So decent* DRM isn't about stopping piracy, really. It's about slowing it down
just enough that it's still worthwhile to jump through the hoops required to
bring that content legally to other regions.

*: It's actually fairly hard to hit this goal on the head, and often I feel companies buy too far into their own bullshit and sense of entitlement with DRM. A lot of shoddy executives with poor understanding of software misuse DRM to the extent that it drastically lowers the value of the content (see: always on DRM) Please continue to bash them, they deserve it.

~~~
shmerl
_> Mainly because increasing quality to be competitive with piracy would
generally require breaking tax and import laws everywhere._

I'm not exactly sure why so? Take for example gaming. GOG sells DRM free games
worldwide, without regional restrictions and no inflated pricing for countries
like Australia for example. Why can't video be sold on similar terms?

 _> So decent DRM isn't about stopping piracy, really. It's about slowing it
down just enough that it's still worthwhile to jump through the hoops required
to bring that content legally to other regions._

In my view it never pays off. The downside of reduced usability is always
worse than any potential gain in slowing down piracy on the period between
some new DRM scheme is introduced until it's broken. Usually that period is
small, and ever since that DRM becomes obsolete, while usability stays
crippled for legitimate users. All those involved in production and
distribution should always keep in mind that DRM means their voluntary
reduction of quality for practically absent gain of shortly slowed down
piracy. How are they planning to compete, when instead of increasing quality,
they cripple their own products?

------
DigitalSea
I think Spotify which I might add has dramatically reduced piracy in the
countries it is available has proven that streaming is the future. People
don't care about not being able to download it, as long as they can watch it
whenever they want. Going back to Spotify, I don't remember the last time I
downloaded any music for free, I just use Spotify.

~~~
adamnemecek
It has been argued multiple times that Spotify is not sustainable.

[http://www.npr.org/blogs/therecord/2012/09/26/161758720/how-...](http://www.npr.org/blogs/therecord/2012/09/26/161758720/how-
musicians-make-money-by-the-fraction-of-a-cent-on-spotify)

So it's cool that you are getting your music legally, nonetheless, in the end
it's not that different than in you had pirated it.

~~~
randyrand
That's not all that related to sustainability. Sure, it might mean musicians
make less but that's just supply and demand and supply is HUGE (still not
infinite).

~~~
adamnemecek
Yeah supply of shitty music is huge but that's the way it works with
everything.

~~~
bluntly_said
I think this is the wrong way to look at it.

When you're in a constrained format like radio or cable tv you can only play
one thing for your audience at a time. Because of that it's critical that what
you play has mass appeal so that lots of people will be okay listening to it.

When you're in an unconstrained model that lets users pick what to watch or
listen to, that mass appeal factor becomes much less important.

Sure, there's a HUGE array of music available, and each of us can claim that
we think most of it's shitty. But when you actually start comparing what you
consider shitty to what I consider shitty, I'd be willing to bet there are a
LOT of areas that don't overlap.

This is the power that comes with being able to stream the content that the
user wants. Mass appeal becomes much less important.

So yeah, there's a huge amount of music out there that I think is shitty. But
there's an equally huge number of people that all have different opinions on
what the shit actually is.

~~~
adamnemecek
I'm not sure I understand your argument. I agree that in an unconstrained
format mass appeal is much less important. Yet I don't feel some sort of 'good
music' saturation point has been reached within the single subgenres (and
subsubgenres) and I think that it will take a while for that to happen.

------
zalew
HN title sums up Business Insider summing up a video sum up of the speech.

~~~
3rd3
As long complexity is only hidden but not lost, that’s OK.

Here is the full speech:
[http://www.youtube.com/watch?v=oheDqofa5NM](http://www.youtube.com/watch?v=oheDqofa5NM)

~~~
Tyrant505
Thank you, from the lazy.

------
lukifer
I still think Netflix is sapping some of the fun and vitality out of their
original series by putting all the episodes up at once. Is binge-watching
great? Of course it is! A huge library of great shows to binge-watch is one of
the Netflix's biggest selling points.

But getting it all at once is like peeking at your Christmas presents early:
you think you want it, but it spoils some of the fun, the eventy-ness of it,
and the social context created by a shared timeline (the so-called "water-
cooler effect").

Anyone who doesn't want that experience can still wait until the whole thing
is out, probably just a few months, at which point it will still be available
in the binge library, presumably forever. (I know some who prefer not to start
a new series _at all_ until the entire thing is finished, which is also okay.)

~~~
avalaunch
_Anyone who doesn 't want that experience can still wait until the whole thing
is out, probably just a few months, at which point it will still be available
in the binge library, presumably forever. (I know some who prefer not to start
a new series at all until the entire thing is finished, which is also okay.)_

Likewise, I could say that anyone who doesn't want to watch them all at once
doesn't have to. You can choose to watch only 1 episode a week.

~~~
werid
the problem is that these people tend to enjoy discussing "this week's
episode" with their friends, and that's hard when they've watched the entire
season/series.

~~~
Tyrant505
This discussion of an ep or event in series happens regardless... You are just
defending a timescale based on an old model as a reason for it to exist.

------
benackles
The technology and business model side of the equation could be solved, if the
licensing problems were resolved. Too bad all the streaming services are still
hamstrung by licensing issues from truly providing a service wherever you are.
Netflix is still unavailable in most parts of the World, including many Asian
countries where piracy is the most prevalent.

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davemel37
This reminds of Fred Wilson's post about Piracy
[http://www.avc.com/a_vc/2012/01/screwcable.html](http://www.avc.com/a_vc/2012/01/screwcable.html)

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jamesmcbennett
In this interview, is there a relationship between a TV pilot and a lean
startup MVP where Spacey is against such a pursuit preferring more visionary
endeavours that take longer to get feedback?

