How Netflix Defines 'Success" Could Be Key To Finding It

TV networks are in constant development. But if you are a new kind of TV network, the ramp-up period can be steep and, one would think, full of risk.

Coming off its "success" with the original series "House of Cards" that began running in February and its soon-to-come new episodes of "Arrested Development," Netflix could possibly start a massive 20 new TV projects. But that depends on "success," says CEO Reed Hastings.  

What does that mean? Netflix, which now has nearly 30 million subscribers in the U.S., hasn't been clear. With “House of Cards,” it made a big deal out of not disclosing viewership numbers – a boasting tool for traditional TV networks. As a matter of fact, Hastings has said he doesn't expect major spikes in Netflix subscriptions because of its new original product

Netflix has been compared a number of times to HBO. By some estimates it is now bigger than HBO. Hastings says the growth curve could reach 90 million subscribers.



Though the years, HBO has had many original projects in development. It also has won hundreds of Emmys for its shows over the last couple of decades. Is that the “success” Netflix is seeking?

Many advertising-supported networks -- cable and broadcast -- have dozens of shows in development at any given time. Do they do it for “success”? Oh yeah. But more importantly, they do it to survive -- refreshing product to keep their current business model going.

Netflix is nowhere near HBO. It has a different model, one that relies on a two-prong attack -- mostly older movie content, what it calls "curated" content, and now "exclusive" stuff like "Cards" and upcoming off-theatrical films.

Years ago, HBO was in the same place, building its name on big premiere packages of off-theatrical movies. Decades later, HBO has a different focus -- original TV shows, movies and miniseries.

Netflix seems to be following that model in part. As a subscription video-on-demand service, it takes HBO’s original "linear" model and spins it differently. (HBO also has video on demand services, including its HBO Go mobile app).

Netflix still shows decent growth, but the key will be how it differentiates from other new digital video platforms. It has done a major deal with Disney to move into the exclusive off-theatrical distribution business. More deals like these will continue to drive up programming costs -- something Netflix has avoided in the past.

The magic for Netflix is finding a new way -- not that of HBO or of traditional ad-supported networks -- to keep growing. Perhaps more pressing, it also needs to define what “success” means to the company.

2 comments about "How Netflix Defines 'Success" Could Be Key To Finding It".
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  1. Brian Hayashi from ConnectMe 360, April 24, 2013 at 6:40 p.m.

    With its launch of original episodic series, Netflix has started drinking from the television version of the fountain of eternal youth. Once you start down that path, you must continue to produce new series, each with its own odds of success, or stop, signalling your impending demise. The fact that Netflix supported Fincher's extravagant vision of the series sends a strong message to the best creative minds seeking a sponsor for their vision, especially when compared to AMC's comparatively shoddy treatment of Darabont with 'The Walking Dead'. At the end of the day, Netflix' obsession with numbers will give them two key insights to define success: how did the inclusion of original programing like 'House of Cards' influence churn; and how efficient are secondary and tertiary distribution windows (like DVD or licensing to traditional b'cast entities) in recouping the original production costs.

  2. Nitin Narang from mediaentertainmentinfo, April 24, 2013 at 11:38 p.m.

    Would agree with Wayne.. the comparison between HBO and Netflix is unwarranted.. which gets highlighted due to individuals rather than the business models. Similarly it is no denying that Netflix has evolved with original content, growing subscribers and ability to maintain the pricing..

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