Thursday, April 28, 2011
Posted by Andrew at 7:30 AM
Not content to kill the dated Blockbuster Video model by sending DVDs straight to your house, Netflix is now hoping to succeed in creating original, Internet-only content that it can stream directly to subscribers. The company is perhaps the first with the infrastructure, business model, and subscriber base to make this feasible - in its most recent earnings call, Netflix claimed to have 22.8 million subscribers in the US and an additonal 800,000 in Canada, for a combined total of 23.6 million. As some sites have noted, this makes it larger than any US cable provider (Comcast, the largest of those, claims 22.8 million subscribers).
I can't really say anything about the show itself (a David Fincher-Kevin Spacey drama called House of Cards, based on a BBC miniseries and book of the same name), but I can talk a bit about the implications, both good and bad, of this move. Put your hand down, and I'll meet you after the jump.
House of Cards itself, if reports are true, is going to be a $100 million project more on par with HBO and BBC miniseries than scripted network television (and that's good, because high-concept network TV dramas tend toward the bad - remember Kings?), and I'd say that's probably a good thing - Netflix is free to take a few more chances than are the major TV networks, and that increased creative freedom can pay off if handled correctly.
One reason Cards is so expensive, though, is because it's such a high risk for both the show's producers and for Netflix. If it succeeds, though, people will likely start knocking on Netflix's door. Ideally, it could lower the barrier to entry for making quality, scripted television while still maintaining an air of legitimacy - a step up, hopefully, from Some Guy with a Flip Video (RIP) and a YouTube account, mostly because of Netflix's reach and distribution model. Taken together, these factors may give television as a medium a good kick in the pants.
That being said, a Netflix that produces its own shows faces obstacles from both cable companies and traditional content creators.
Let's start with the technical side: Internet bandwidth caps are slowly, inexorably coming to the US, and given that streaming video is one of the most bandwidth-intensive things you can do with your Internet connection, Netflix stands to lose out here. Harsh caps are already in place in Canada, which caused the service to reduce the quality of streaming video in that country to reduce bandwidth use. Bandwidth caps have also doubtlessly played a part in Netflix's slower-than-expected adoption in our northern neighbor.
Related to the bandwidth cap issue is Net Neutrality - this is a huge and complicated issue, but boiled down to its essence, Internet service providers like Comcast or Time Warner could potentially elect to throttle the speed of streaming video unless the consumer pays a premium to have the bottleneck removed - the companies would use this in order to promote their own traditional cable services. Having to pay extra to stream video from services like Netflix could slow its adoption or cause backsliding, especially as families look for things to cut from their budgets.
The last caveat is Netflix's dependence on current, traditional content creators for much of what is currently available on the service. Part of why Netflix has gotten so popular is that it's easy to stream multiple seasons of countless television shows without much effort, but if NBC or ABC came to see Netflix as a competitor instead of merely a conduit for their content, they could choose not to make as much of their respective libraries available. One of Hulu's greatest weaknesses is lack of cooperation from some major networks and providers, and if Netflix developed similar weaknesses, it could potentially cut them off at the knees.
The Facts of Life
So! I'm genuinely excited to see what Netflix can deliver in terms of original content - I hope it's an experiment that succeeds, and I hope we see more stuff like it going forward. What I'm less sure about is whether it can succeed in the long term, and what impact it will have on the service and its subscribers if it does.