I recently watched the entire first season of House of Cards, Netflix's first foray into original programming. All-in-all, it was pretty solid. The plot is full of twists and turns and it does an excellent job capturing the inane bureaucratic non-sense of Washington while still keeping the audience engaged.
Now, while I recommend that anyone with an interest in politics watches the show, this post isn't about that. It's about the future of television programming.
Let's be clear. What Netflix has done with House of Cards is radical. On February 1st, it didn't just release an episode of the show. It released the entire first season. An entire season of original programming with major star power released on a single day. Is this the future of television programming? Let's speculate.
People have been speculating about the death of traditional television for some time now. The advent and proliferation of DVRs, now in 40% of American households, has been crushing ratings for years. And as ratings go, advertisement dollars follow. And new innovations in DVR technology, like Dish Network's "Hopper", let viewers automatically skip commercials without having to fast-forward (as with traditional digital video recorders.)
Traditional networks are getting hammered. For instance, NBC's entire new slate of dramas are unmitigated disasters in the ratings. And there are no real fixes.
At this point, it seems that people tune in to watch five kinds of events live:
1.) Sporting Events
2.) Major Political Events (i.e. elections)
3.) Reality Television / Competitions (i.e. The Voice)
4.) Extremely high quality original programs (i.e. Mad Men, The Walking Dead)
5.) Original programming on CBS (which is simply baffling)
Sporting Events, namely the NFL, are far and away the hottest commodity in television. ESPN pays almost $2 billion annually to broadcast Monday Night Football. Frankly, the price they pay is starting to seep into the broadcasts because the games take 4 hours and are loaded to the brim with ads. "Football Night in America," NBC's ludicrously named Sunday Night Football program pulls in monster ratings and is consistently the highest rated TV show on Sunday nights. The point is, show popular sports and people will tune in...and they'll tune in live.
Major political events are in a similar vein as sporting events. Only, they don't draw nearly as big and audience and they don't happen nearly as frequently. That said, when major elections take place, people tune in to watch. Poor old NBC actually won the ratings battle on Election Night 2012.
Reality Television in its current form began with Survivor and exploded after the Writers went on strike during 2007-2008. It's cheap and easy to produce and delivers a decent ROI with minimal investment. While it's dumbing down television through shows like "Honey Boo Boo," "Pawn Stars," and (of course) "Hardcore Pawn," it works from a financial perspective. Entire channels are more or less devoted to reality programming, TLC (formerly The Learning Channel) and its niche-channel competition are loaded with reality programming. It's working for them now, but how long until we've drained the swamp of every workable reality idea? It's one thing to watch a show like American Idol, it's another thing when The Weather Channel starts running reality shows.
Shows like Mad Men, The Walking Dead, Sons of Anarchy, Suits, and Breaking Bad represent the best TV has to offer. By airing on basic cable, they don't face the same hurdles in terms of ratings as traditional networks. AMC, FX, and USA pull in royalties from cable providers, allowing them to focus on crafting high quality television. In turn, show runners with truly creative minds can allow for a slow burn. There isn't a serious fear of having a new show cancelled after an episode or two. This lack of a sole focus on ratings has counterintuitively led to very solid ratings. The Walking Dead's recent premiere shattered previous cable ratings and beat traditional networks, including American Idol for the night. Basic cable networks are stepping into territory occupied by subscription-based powerhouses like HBO and Showtime. And they're doing a damn good job.
Lastly, CBS' original programming continues to dominate the ratings. NCIS, tv's number one rated show, is mind-numbingly awful. There is, however, one explanation for their ratings success. The age of their audience. As of last fall, the average CBS viewer was 57 years old. Let's face it, folks, older people aren't as sharp when it comes to technology. That, and it's a helluva lot more likely that your old man is going to be at home when a new episode of "Mike and Molly" comes on.
So, where does Netflix fit into all of this? I believe that Netflix sees itself as the next logical step for Category 4. Reed Hastings, Netflix CEO, has himself said that he wants Netflix to become the next-generation HBO. Hastings' stated goal is to release five new shows a year. While HBO is slow to release a streaming-only subscription option, Netflix is moving to dominate the market. House of Cards is the first foray into its journey to become HBO 2.0, and it's an excellent one.
So, what does the future hold? Netflix is obviously in a fantastic position to lead a new generation of hybrid content providers with its vast assortment of on-demand movies and TV shows and massive existing subscriber base. But, is the idea of a weekly episodic TV show on the way out? Is the future really based in single day season dumps? Think of the inherent risks in that. What if the show is a flop? You're signing up for a large investment for something that may or may not lead to long-term subscribers. With HBO, they're at least guaranteed that you'll stick around for a few months to finish watching a season of True Blood or Veep.
And from a viewer's perspective, is it really optimal to bang out new episodes over the course of a few days instead of a couple months? I'm not sure it is. When I think about some of the best viewing experiences I've had, I think of shows like Lost. The speculation in-between episodes was part of what made that show so great. With House of Cards, there is no speculation, you simply hit play on the next episode in the series.
Lastly, what does Netflix's strategy mean for TV in general? Are we going to see basic cable channels continue to dominate and then slowly shift into online platforms? I know I'd pay money to watch Sons of Anarchy or Breaking Bad online. Hell, I'd even be ok watching commercials if it meant I could watch the shows whenever I wanted to. What of the rest of TV? Will we eventually reach a point where all we're left with is sporting events, news coverage, and reality programming?
People want to cheer the demise of broadcast television in the same way that people cheered the rise of digital music downloads. There is a view that TV will eventually move to an "a la carte" format, where you pay for what you want and that's that. I'm just not sure that this will ever completely happen. Without the cable subscription format, channels like AMC would never have been able to invest in a show like Mad Men. I think what we will see, however, is a great contraction in the number of channels available on cable. There is simply no need for a vast number of duplicative channels that can only exist thanks to cable subsidies. Do we really need TLC, HGTV, and the DIY channel? Why watch someone repair a sink on DIY when you can do the same thing on YouTube? It will take time, and cable companies and network executives will fight it tooth and nail, but there is nothing they can do about it.
The future, as I see it, combines subscription streaming services, like Netflix, Hulu, and HBO Go, with a select group of high-quality channels, like FX, AMC, TNT, with room for networks that broadcast some combination of news, sports, and original programming. How we get there will be messy and interesting to watch. In the long run one thing seems certain, the viewers will benefit.
Very good post. I think i'm gonna watch House of cards right now
I enjoyed it. Though, you've got to really suspend your disbelief as some plot points are real stretches. With that said, I really did enjoy it.
Loving House of Cards (~halfway through). I, too, disagree with their decision to release the series all at once. What's their rationale?
I feel like they could just release it in thirds or something. Like, four at a time. I guess if they think they can have five shows a year, they can space out the new releases so subscribers always have original content to look forward to. And, let's be honest, people aren't going to sign up for a month and then leave when they see how solid the library is on Netflix, particularly on the TV show side of things.
I just don't know if I care for the direction things are headed in. Like, yes, we all want access to shows whenever we want to watch them and we don't like ads or paying for things. But, by paying for things, we get better quality products. Do we really want to completely dumb down our television so that it's nothing but an endless parade of reality garbage, sports, and news and eventually a few quality shows on Netflix streaming / HBO streaming?
FX and AMC would never have been able to do what they are doing now if they weren't getting royalties from cable companies. While they have highly rated shows now, it has taken some time. Shows like Sons of Anarchy are just now picking up major viewership and it's been on the air for five years!
Side note: I'm two seasons into Sons of Anarchy and I recommend it to absolutely everyone. One of the best shows I've watched.
Contraction of the number of channels on cable will be a very slow process. We're not at a mission critical point in the evolution yet where the content creators are losing all negotiating power for their network bundles (e.g. Viacom packaging MTV, Nickelodeon and 9 or so lesser networks together in a contract, forcing carriage of all networks).
A breaking point will be reached eventually though, when cable package costs rise to the point where "cord cutting" is indisputable. Plus it's a generational thing - fewer young people are signing up for cable when they get their new homes because they're content with Netflix/Hulu etc.
I'm excited not because I'm a huge TV watcher but I love watching industries that are forced to evolve for the consumer in spite of the stubbornness of execs who try to hold on to an old but functioning model.
House of Cards was a lot of fun, but I am wondering what plot points you thought were "real stretches"? Overall I found the show very realistic and a good representation of what no doubt goes on behind closed doors.
I have seen the British version of the show (which is only 4 episode mini series) and it is very similar considering they are both based on a book--same lines in some cases, similar situations and tactics, etc
What I think makes the American version better than the British is a) Kevin Spacey (although the British actor is very good, it's Kevin FUCKING Spacey) and b) where the British version tells you what the ultimate goal is in the first episode the American version lets you watch episode after episode and the viewer is deceived into believing that the series is episode after episode and that each move is separate from one another. The viewer doesn't realize until episode 9 or so that everything that has happened since episode one has, as the Joker would say, "All part of the plan". As a reader of the Game of Thrones books the show definitely reminds me of the political maneuvering that is done so well in the books, but is somewhat lost in the series. House of Cards isn't an action series with lots of death, what it is is a cerebral chess match between Kevin Spacey and everyone else.
The only complaint that I have with the season is that there really isn't a "finale" and the season ends not only with unfinished story arc, but with most of our characters in very real danger from a variety of antagonists. I guess that we will have to wait until season two to see how our characters survive. When you play the game of thrones, you win or you die.
Just a random thought I had, but couldn't you see commercials of some sort seeping into Netflix content down the road? The amount of product placement in House of Cards is pretty mind blowing. Why not sponsors for the episodes? You could even have a bar at the bottom of the screen that advertises things while you watch. It could be hyper-specific based on things you've watched. So, let's say I'm watching Sons of Anarchy, couldn't they advertise tee shirts from the show or something like that?
And, on an unrelated note. Has anyone dabbled in video game advertising? Like, in open world games. Let's say I'm playing the next Grand Theft Auto, it's sort of mind blowing that they don't sell advertising space in the virtual world. People play the game for 50 hours on end, couldn't they have real-time ads for when the game is in a system that's connected to the internet?
Just some thoughts.
As an Advertising major, I can answer your question in regards to advertising and video games.
The issues that is present with such advertising is relevance and frankly target audiences. While GTA might be a great place to advertise Coca-Cola, Pepsi, or Dr. Pepper. its a terrible place to advertise other things. This comes with what is deemed as a low involvement/low research product. Or products that you can be influenced into buying just by positioning, advertising, or even a friend mentioning it. These products are impulse buys and the larger the group of people that the company can advertise to the better.
Other items that fall out of this spectrum generally require the purchaser to do research and have some sort of seasonality. For example on the extremee other side of the spectrum is buying a car. This is a high involvment/High research purchase and people tend to do a lot of research and shop around before buying. This is why most car commercials focus on the deals that you will get purchasing a car and not the merits of the car. Any customer buying a car generally has seen two to three and is looking for specific things.
Then comes the big killer... Seasonality. Even with updates and DLC (Downloadable Content), games don't get patched that often unless they are of the PC genre. A console game will get maybe one or two major patches during its' life but that is about it. This causes issues with putting advertisments in game as sometimes the product doesn't do well and there is no way to change the advertisement. (This is actually apparent in some games, I want to reference Tom Clancy's Ghost Recon from 2008. You can still find Dark Knight promos in the game). Also, as our society has become more consumer oriented advertisements have gone more to a "Buy this now due to this special off" type of stance. This creates issues when say you wait for 6 months to buy a video game at used price. Companies just aren't willing to take that risk and pay the money for that type of advertising.
Oh, its also very hard to put an advertisment up for anything in a game like Skyrim or most fantasy RPGs. While we are at it, lets face the facts and realize those games are a huge chunk of the market.
Now, there is a genre of games where this is actually already in full swing and will stay that way till the end of time. Sports Games. Most new sports games are actually getting a good chunk of funding through the advertising that they make available. Take MLB the Show. It updates everytime you turn it on so as to download current rosters for teams. If you ever pay close attention, every now and then an advertisement will change with the rosters. It is really quite genius.
So, Long Story Short or TL;DR, Video games don't provide the ability to change ads. Advertisements for products that require a bit of research (including video games themselves) have seasonality which can be lost on video games.(You know, the 0 down, 0 payments, till 2020 if you come in by friday) Its a very small advertising market that is highly segregated. If you want to see what you proposed in action, check out Sports games (anything with a dynamic roster feature is best.) Lastly, its hard to fit advertisments for modern products into half of the genres of video games out there.
-Hope that answers your quesiton. I did pound this out pretty quickly and figured I'd try and answer it to where a full understanding of the issue would be had. So, sorry for the long post. If you have anymore questions feel free to PM me.
-SStrasburger
Awesome post. Thanks for writing that out. I've noticed the updating ads when I play Madden, too bad for them that I hate the shit out of Papa Johns.
I do think there could be creative ways to tie ads into games. Though, to your point, some genres are going to be way easier than others. Again, great write-up!
Gekko -
I think the issue I have with the plot is that Frank Underwood's motivations just seem a bit of a stretch. I don't want to say much because I don't want to spoil anything for anyone, I just think that his motivations were too power-centric and some of the actions he takes to get more power seem unnecessary and, if anything, make things more complex than they need to be.
That said, I appreciate it from the point of view of being entertained.
TheKing,
Great write-up. I've been meaning to blog more about this particular topic but been sidetracked. One of my favorite writers (and investors) wrote an extensive post re: bundling a few years back that's worth a read and why it won't be happening any time soon: http://abovethecrowd.com/2010/04/28/affiliate-fees-make-the-world-go-ro…
I definitely agree with you on the suspense/speculation. When Breaking Bad and Game of Thrones are on, I prefer to wait at minimum a few days if I'm behind to let the previous episode sink in and digest, then go forth onto the show. For shows of quality, I definitely prefer to consume them slowly, rather than gobble them down like some damn fast food burger.
Re: advertising: NFLX has been ADAMANT about no advertising; however I really don't see any way they can't use it as a revenue stream. Content price / acquisition are through the roof, and it's a rich men's game that I don't think it's a business model that can be sustained purely on subscribers fees. (Domestically, at least).
Oh yeah. And I feel like they could do some pretty creative advertising. I don't even think it would have to be traditional commercials. It could blend display ads, the kinds of ads that load on YouTube videos, and tons of in-show product placement. Honestly, I wouldn't give a shit if they had Nike Swooshes all over the place in period pieces if it meant that I'd get better TV when I wanted to watch it.
Is there a reason Netflix couldn't end up mimicking HBO's model with both original and paying for movies that are out of theaters?
Sure. HBO has been owned by Time Warner over the years and with that came a war chest and time to establish that business model.
Netflix can get there. Getting exclusive Disney content for its pay window was a huge first step. I still think they need to have a bigger war chest to go to battle with HBO at the moment. They've got two shows so far; HBO is THE premium TV provider. As Omar said in The Wire, if you come at the king, you best not miss. (well in this case I think there's a scenario where both companies can survive).
Is SoA really that good? In the same league as Mad Men and Breaking Bad?
I like it a lot more than Mad Men, but it's a very different show. I'm only two seasons deep, but it's some seriously awesome shit. Breaking Bad is probably my favorite show that's on TV today, but SoA might be a close second. I highly recommend you check it out.
I just started watching it a few days ago and have been cruising through episodes. I think the most interesting aspect of this whole thing is how Netflix used its vast amount of information regarding customer preferences to develop the series. For example, Netflix knows that a ton of its customers watch and enjoy Kevin Spacey and David Fincher movies as well as political thrillers, so it makes sense to combine all of that into something it knows has a high chance for success.
http://www.indiewire.com/article/television/how-netflix-is-using-data-m…
I banged out House of Cards in a week. I honestly never liked watching programmed television .. show up at this time and watch the episode. It's annoying, impractical, and get's in the way of life ... but that's my personal opinion I guess.
You still get suspense in between seasons of shows. Not as much if they are all on demand at the same time though. It depends on whether you are really interested in the show to begin with. Netflix had all the episodes up of LOST when I found out about it and watched the show ... and I was excited even though every single one was available.
I'm just as excited if not more ... for House of Cards ... because it's new and not all available at once. They need to solve the problem of releasing 1 season per year though ... That may absolutely kill things now. I'm gonna get bored waiting 5-6 months and might not even be interested in Frank Underwood by then. And I really like the show ... that's saying something.
I caught House of Cards. I thought it was pretty damn great. Kevin Spacey was something else as the lead. Not sure what you thought was a little out there but I hated the chief of staff, so incompetent to the point, its ridiculous and the journalist Zoe was a little annoying (but hot) and her career arc was unbelievable but I guess necessary for the show to progress.
I liked the idea of releasing a show all at once, especially one of this quality. I think the purpose is to get people talking due to the uniqueness of how its available and then get people hooked because its a great product.
how does the netflix model deal with another issue that all scripted shows deal with...massive torrent proliferation? I was able to torrent HoC within 24 hours of it's release.
Between the ability to torrent scripted shows, redbox for the very recent of releases, and torrents for older/classic movies (a bit harder but as a classic movie buff i'm still able to find quite a bit of what i'm looking for) i fail to see Netflix as a huge game changer.
This is another factor in why sports programming is even more valuable. Yes, it's less prone to DVR but it is also less prone to piracy (discounting piracy streaming sites). The issue with pirating sports streams is unlike scripted shows, the consistent quality of HD is not present in streams. It is a pain to jump around for a high quality stream compared to the ease of downloading a scripted project in HD glory.
Loved the first season. Kevin Spacey just became one of my favorite actors.
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