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How Netflix Is Making a Sneak-Attack on Television

This time last year who would have thought that Netflix would be the company to completely disrupt traditional television? Probably very few people, but the introduction of House of Cardstheir first true foray into premium original content—marks the beginning of a flank attack to the television old-guard.

For years various factions of the public have been crying out to their cable and satellite providers to unbundle television programming and deliver a la carte purchasing options. Many have dropped their subscription television altogether and have opted to pull streaming content into their homes by way of a Roku box, Apple TV, or Boxee setup. iTunes is about as close as any of us will get to a la carte programming with it's pay-per-episode model, but it isn't anywhere near what we had once had in mind. 

It's bad business for cable and satellite companies to unbundle their program offerings. Bundling from the networks is what allows pricing to stay where it's at today. Were the providers to offer specific channels separately, consumers would no doubt end up paying upwards of $10/month or more per channel subscribed, and that's only in the beginning. Bundling means everyone subsidizes everyone else's viewing habits. That subsidy is what keeps pricing at bay. Without it, per-channel price creep would continue on an upward trend.

What Netflix is doing is eschewing this model and inventing their own based on their specific economies of production, and it serves to highlight the absurdity of considering Netflix in the same breath as traditional television networks. At last week's D: Dive into Media conference, Ted Sarandos, chief content officer at Netflix and the man responsible for purchasing the rights to House of Cards, was joined by Mitch Hurwitz and Will Arnett for a sit down talk with Walt Mossberg and Peter Kafka. Sarandos, Hurwitz, and Arnett spoke to the upcoming exclusive airing of the fourth season of the newly revived, and wildly anticipated, comedy Arrested Development.

Hurwitz pointed out the difference in working with Netflix to get this show up and running. See, Netflix content, across the board, is presented all at once. Sarandos made the obvious decision to offer every episode of House of Cards at the same time, and will repeat that pattern with Arrested Development. Leading up to the release many critics and journalists questioned this action, wondering if it could possibly succeed. But Sarandos' explanation makes complete sense. Why would Netflix make their content the only content they show in limited release? Netflix knows their customer and knows the trends. Releasing a Netflix-exclusive series all at once is the only logical format for the company and for its audience.

But this fairly radical change in entertainment programming required a shift in the way the show writers and producers worked. Writing and creating for immediate release is a different animal, and it comes, surprisingly, with some hidden benefits. During the interview, Hurwitz and Arnett spoke to the greater flexibility they had as creatives. Most of the original cast of AD have progressed in their careers and have busier schedules since originally starring in the series. In traditional television, the studio essentially buys the cast for 5 years, up front. That model would have immediately killed any possibility of AD being started up again by forcing the talent to choose between their current careers and a potentially one-off reunion series. But because of the all-at-once nature of the new Netflix model, the show's cast and crew were only committed for the length of production. It's more akin to the way feature films are shot and managed.

Creatively this gave the writers wide freedom to create a complex script. Sarandos pointed out that House of Cards, in particular, was created to be watched several episodes at a time and that format released the writers from having to recap the previous episode, or work that exposition into the plotlines, leaving room for better character development and deeper plot. The assumption is that the viewer hasn't waited an entire week to watch the next episode. Given, some viewers may do that, but according to the data Sarandos cited, that's not their normal viewer.

Alan Sepinwall (2012), in his book The Revolution Was Televised, surveys the television drama landscape around the time The Sopranos was produced for HBO. One of his key observations is that HBO was open to making great content and provided a supportive and fairly frictionless environment for show creators to do what they wanted. This was a huge change for these creatives after working with network television studios for decades where the rules were wide and long. Why did HBO end up with such great shows and in turn change the entire scope of what could be done in a television drama? Because they took those risks early.

Netflix has essentially taken that role on and given even greater flexibility to the talent and crew. It turns out that programming channels—like television networks and now streaming services like Netflix—are able to take greater risks in production when they aren't under the watchful eyes of advertisers. In the case of HBO, they didn't care about ratings and thus made a groundbreaking series. Similarly, Netflix doesn't need to show ratings to anyone; in fact, Sarandos refuses to discuss hard numbers. They don't purchase advertising and their revenues are based on a subscription model and customer acquisition that comes through other means. So there's little risk in producing their own content and releasing it at once. Shaking off the obligations that come with an advertiser's stake in the operation, networks are free to focus on great content. And for Netflix, the money they spend to commission and produce a series essentially becomes a line item in their marketing budget and they can create whatever measurement they want for success.

And that is the essential refocusing that is so revolutionary. While executives at Netflix continually state that they are not out to get the TV networks, their experiments in programming have started a fundamental shift in the paradigm of short-form entertainment consumption. And it is one that will set a new precedent for creative mass media production for the next decade, and perhaps longer.