Thursday, September 4, 2014

I know I pick on Netflix a lot

But the coverage of the company keeps providing such good examples of the way flacks and hacks force real stories into standard narratives.

Some of this can be fairly subtle. For example, using definitions that aren't standard but aren't quite wrong. For example, Check out this statement from Chief Financial Officer David Wells:
"Our intent is to continue to expand the content library," Wells told the investors in attendance. "If we're going to meaningfully address the 60 million to 90 million [potential U.S. subscribers], we'll need to do that by adding more originals, we need to do that by adding more breadth of content. And part of that is making our content more exclusive, so moving it from nonexclusive to exclusive, and offering more curated offerings" 
Check out the phrase "content library." The standard definition of the phrase is a collection of rights to artistic intellectual property. These days, a handful of very big entertainment companies* like AOL Time Warner or Disney own virtually every property created over the past century that could be shown on TV in either new or original form. If you have a retro-channel and you want to show I Dream of Jeannie, you have to get permission from (and send a check to) Sony. If you wanted to make a new Woody Woodpecker movie, you'd have to deal with NBC Universal.

Under the standard definition, Netflix simply does not have a content library.
HBO owns and produces about 95% of the original programming carried on its channels. Netflix has said it doesn’t want to adopt the studio model, preferring to be a licensee of content. The studio model lets HBO recoup the investment in original programming through its 114 million subscribers in 65 countries worldwide, as well as via DVD sales. For example, HBO earns $2.6 million in license fees for a single episode of “Game of Thrones” in international territories, according to HBO.

By contrast, Netflix calls itself a “programmer” not a producer. It licensed streaming rights to “House of Cards” from producer Media Rights Capital. MRC, which owns the content, cut a deal with Sony Pictures Television to sell DVD and international TV rights covering non-Netflix countries.
To put things in perspective, Sex in the City and its sequels probably brought in more than a billion dollars in revenue after the show ended. As far as I can tell, Netflix has no post-run rights of any kind for House of Cards or Orange is the New Black.

When Wells says "content library," he  means "shows that are currently being licensed."  That's one of those statements doesn't tend to strike the knowledgeable as a lie but which is highly misleading to many if not most of the journalists covering the story.

Netflix has done a masterful job framing its own narrative. Most of the press has embraced and internalized

Netflix = HBO 2.0

HBO is known for its content library. When a Netflix executive says "Our intent is to continue to expand the content library," it is remarkably easy for those journalists to miss the fact that 'content library' means something completely different in those two sentences.

* The exception being Dreamworks which is only worth around a couple billion, but that studio occupies a strange spot in the ecosystem.

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