Why Netflix won’t become a TV channel

The Christian Science Monitor reports that Netflix is bidding against HBO and AMC for a new TV series, House of Cards. It’s a drama starring Kevin Spacey, directed by David Fincher (The Social Network) that will cost about $4-6 million per episode (high, for series) with an apparently unheard-of two-season upfront commitment.

Is Netflix starting a TV channel? Nope. They’re smarter than that.

For Netflix, there are two key success metrics. One is subscriber count (20 million as of December, 2010). The other is dollars per subscriber per month. In 2010, more Netflix customers paid $7.99 per month for unlimited streaming than $9.99 per month or more for by-mail DVDs.

Which means: Netflix must press hard to find–and keep–their online customers. Increasingly, motion pictures and TV series are available from lots of TV, video, internet and other sources. To stay ahead, Netflix needs its own stuff. But they don’t need to offer a 24/7 channel. Instead, their relationship with customers is based entirely upon on-demand viewing–anytime, anywhere, any device, etc.

Which means: in some ways, Netflix is establishing a new model. USA Network, AMC, HBO–these companies program TV channels first, and offer programs on various platforms second. By focusing on the ways we’re all learning to use our iPads, phones, etc., Netflix is jumping over the old linear TV model. And if they have the right programs–always the biggest possible “if”–they may succeed, and cause some damage to competitors. If they flop, only industry insiders will notice. Netflix’s customers will just continue to happily stream movies and TV shows, unaffected by this particular adventure.

http://www.deadline.com/2011/03/netflix-to-enter-original-programming-with-mega-deal-for-david-fincher-kevin-spacey-drama-series-house-of-cards/

http://www.csmonitor.com/Innovation/Horizons/2011/0316/Netflix-The-next-HBO

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