House of Cards by Netflix – disrupting TV

Netflix – making Internet only TV

Just how big is Netflix? This Sunday’s Telegraph has an in-depth article about the House of Cards and its impact on TV in general. As a Netflix subscriber from its launch in Silicon Valley many years ago as a DVD by post service, we have watched and invested in Netflix.

House of Cards

House_of_Cards_title_cardWith a cast including Kevin Spacey, Robin Wright and Kate Mara, a huge budget and a commitment to 26 episodes, the series would seem to have everything in its favour. Except for one thing – it’s not on television.

House of Cards was the first major original commission for internet-only TV and film service Netflix. With Spacey taking the role made famous by Ian Richardson, it was a test case for whether the internet really was revolutionising the television business in the way that many claim.

Rather than making viewers wait a week for each episode, the whole first series was to be released in one go to subscribers. The series wasn’t competing against whatever happened to be on at a given time – it was up against the whole back catalogue of films and TV on the service. Viewers could make their own entire schedule.

Since its release at the beginning of February, the show has been praised to the skies by critics. Accompanied by a glamorous West End launch and a huge marketing campaign, it’s got more buzz than any other show around. But how many people are actually watching it? And how big is internet TV?

From the Telegraph

“I am proud to say the show is doing excessively well,” says Yellin, Netflix’s vice-president of product innovation. But even though Netflix has more data on its viewers than any traditional service, he’s not giving much away. “It’s better than our wildest dreams,” he says. “People are watching it in droves and it’s the number one Netflix show on streaming in the UK and around the world right now.”

That means Netflix’s 33m members around the world like it, but it doesn’t reveal if the service is growing faster than it was before, or if the investment in the show and others like it justifies the sapping effect on the company’s profits.

Yellin argues that doesn’t really matter, because the service, which is available on computers, phones, tablets and the latest televisions, is not beholden to advertisers. It’s funded solely by subscriptions, which in the UK cost £5.99 per month.

“I have been a film geek my whole life – I was the freaky kid that found out about weekly box office details,” says Yellin. “And it’s kind of depressing to me that people care about those numbers or how many dollars it’s making. What they should care about is:
‘Is this good for me?’ “

So Netflix is not only disrupting how television works, it is also disrupting how programmes are judged. Where UK broadcaster BSkyB balances the desires of its subscribers and advertisers, Netflix is beholden solely to subscribers’ judgment.

So that meeting with Fincher a year ago was not about how to appeal to vital test audiences, it was rather about how to convince Netflix’s own subscribers to watch the show.

“I was telling him what we were doing to promote his show with our users,” says Yellin.

“I told him what we do about personalising the service for each user and I asked him for a favour. We don’t just want the usual long and short trailer, I said. Instead, I want six trailers to address all the kinds of facets House of Cards has so each can go to a different audience. He cut six different trailers and we had a team trying to match them to the different types of Netflix users.”

Now when a viewer finishes watching one show, they’re shown a tailored commercial to promote House of Cards. Thanks to
all the data Netflix has at its disposal, Yellin will know if the plan works by the summer.

Gathering that level of information and understanding will be key to Netflix’s continued success. Yellin says the site has already stopped collecting some data because it was actually quite trivial.

“We realised age and gender didn’t matter. We downgraded the value of what users tell us they like, and star ratings, because just press play once on something and we learn more about you. How fast you watch something, how fast you watch one series relative to another, these are much more indicative.”

The site will also soon introduce multiple personalised accounts, so a family can have different, tailored suggestions for each member. As Netflix discovers more about its members, the idea is that it will be able to develop its portfolio. Currently it offers a mixture of films that are at least a year old, TV series and some new programmes such as House of Cards.

“I see our selection as a function of where we are in the ecosystem,” says Yellin. “Would we like to offer newer movies? As we grow we’ll be able to go to the studios and write bigger cheques and they’ll license us new films.”

How the service evolves, however, remains a work in progress.

house of cards

“We’re supporting originals and trying to get very creative with that,” says Yellin. “The pressure is not to get caught on the vestiges of what the world was like. It’s so easy to get caught: this is what you’re supposed to do when a new show comes out. If you were going to make entertainment the way it would be when a consumer controls it, what would you do? Tabula rasa.”

For now, says Yellin, that certainly doesn’t mean introducing advertising simply to get revenue and write those bigger cheques.

“I don’t want our members to mix the service they’re paying for with advertising,” he says. “Some subscription services have advertising but I think that’s absurd.

“We pride ourselves on not having advertisers. I don’t know what’s going to happen five or 10 years from now but there are no near-term plans for advertising.”

So without advertising, Netflix must rely on quality programming and natural expansion to increase its budgets. It has already commissioned another major original, the horror Hemlock Grove, and has said it will develop more new series. Viewers watch those series, the data says, on a host of devices.

Although the latest research in the UK says Britons watch just three minutes of TV per day on tablets and phones, Yellin says their use among Netflix subscribers “is exploding”.

The service has always gone for a strategy it calls “device ubiquity”. That was originally a plan to be available on any device a potential customer might have, from a mobile phone to a smart TV.

“What we’re seeing now, though, is each consumer has multiple devices,” says Yellin. “So people might start watching something on their computer and then switch to a tablet.” Netflix automatically means they can pick up exactly where they left off.

As more devices emerge, Yellin says he will focus on voice control for TV, so users will be able to ask to watch something. Where some TV manufacturers are betting on gesture controls, where a camera senses a wave of the hand to change channels, Yellin is dismissive. “Who wants to do aerobics while they’re watching TV?” he asks.

“I’ve played with Siri, though,” he says of Apple’s voice assistant. “I’m sure it’s gonna get a lot better. The only case for use at the moment is entertaining my kids. It’s not there yet. But we’re playing with a talking interface and it’s done well. We’ll launch something in the near future. Siri needs to cope with the whole universe but all we need to cope with is what movie you’re going to watch next, so we have an advantage.”

And that kind of innovation is key to Netflix. The site can discern what people like, and it can give them technology to lower the barriers to finding it thanks to the internet. “We have Silicon Valley roots and a big LA office,” claims Yellin. “We are a wonderful convergence of Silicon Valley and Hollywood. That’s what allows us to make great content.”

That does not mean, however, Yellin has worked out what the internet will do to TV. He doesn’t even know if Netflix will maintain its policy of releasing its own series all in one go.

“The cynical view is you need to string viewers along. But we’re making a compact with them. We don’t want to make people suspicious of our intentions. But we do know one thing, and that is that we don’t know. We’re all inventing this together.”

2 thoughts on “House of Cards by Netflix – disrupting TV

  1. I read a mention of House of Cards in the paper. Glad that you further enticed my reading with this post. I have now subscribed and loving both Netflix on Apple TV and the House of Cards story. Thanks for the information.

  2. Kellye Baumgardner

    In February 2007, the company delivered its billionth DVD and began to move away from its original core business model of mailing DVDs by introducing video-on-demand via the Internet. Netflix grew while DVD sales fell from 2006 to 2011.

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