House of Cards Article !

1. House of Cards: how Netflix’s $100m gamble made
them internet video kings Aki Tsuchiya Friday 27 February 2015
With originalseries now launching every fortnight, Netflix’sbusiness
modelis truly pioneering. Where nextfor the company?
Netflix isthe mostsuccessful paidinternetTV service andaposter-childof the greatmedia
migrationtotime-shiftedviewingaroundthe world.Noads,noschedulingconstraints,and
entire seasonsetsmade available basedoncustomerdata.It’sthe emergence of anew
model andviewinghabitsetby Netflix.
In earlyJanuarythe GoldenGlobe awardssaw the traditionallydominantbroadcasters make
way for Netflix andAmazon,withKevinSpaceytakingbestactorforHouse of Cards and
Transparenttakingbestcomedy.Thisprovidedfurtherclouttothe nextgenerationof “data-
driven”productions.Withsuchaprelude,the anticipationhasbeenrife forHouse of Cards
season3, launchingtoday.The companyalsoplansto launcha new show everyfortnight.
Foundedasa mail-orderDVDsubscriptionservice in1999, Netflixhascome a longwayto
become the second-mostpopularprimetimevideodestination,behindYouTube
Fifteenyearson,Netflixjustannounced $5.5bninannual sales,havingpivotedtoapremium
streamingservice wheresubscribersare privytoan all-you-can-watchexperience.In
context,that’shalf of whatCBS ($13.8bn) makestoday,and approximatelydouble ITV’s
revenues(£1.8bn).Animpressivemilestone foraventure startedwithjust$2.5m incash.
People nowinvariablyexpectthe latestshowsandfilmstobe available forstreaming,legally
or not.
In otherwords, bingeingisbecomingde facto,withthe numberof UKlegal bingers
estimatedatthree million,whilemore than20 million(around30%) are still engagedin
piracy.So the rise of Netflix surelyhasbeenagoodthingby fightingpiracyandreturning
$5.2bn to the studiosinlicensingrevenues.
The data trailblaze
Netflix hasproventhatalegitimate andindependentpaidvideostreamingservicecan
succeedif the rightcards are played.Since 2012, Netflix hasmade more than250 hours of
original programming,receivingnominationsfor45 Emmys,10 GoldenGlobesand three
AcademyAwards.
Later thisyearwe can lookforwardtoNetflix’sfirstfeature film –CrouchingTigerHidden
Dragon II:The GreenDestiny.Already causingastirin Hollywood,the productionisamove
as boldas the $100m House of Cardsstory,where forthe firsttime amajor feature filmwill
be premieringbothonlineandatcinemasonthe same day – as longas the cinemachains
don’tall boycottit.
What isits secret?Netflix’schief contentofficerTedSarandos recentlyreaffirmed thatthe
companyreliesonitsrichsubscriberdatato take editorial decisionswhere“seventyisthe

2. data and thirtyisjudgement,the thirtyneedstobe ontop”. But whatdata do the
commissionersleverage?
Thoughit islargelyunknown,theirmetricisfocusedonengagementtoidentifyhard-boiled
loyal fansthat drive the spreadof the title,asopposedtorelyingonpassive viewingfigures.
Such loyaltydatafromdifferentfangroupsactas a yardstickof elementstobetonfor the
nextbigthingto specificaudiences.Thisisnotdissimilartohow Amazoncreatesunique
shoppingsuggestionsforeveryuser.Forexample, HemlockGrove isadata-driven
commission withacleartargetto the tweensegment.
Hollywoodisalsojumpingonthisdatabandwagon astheyseektosubstitute the use of
traditional researchcompanies,insteadrelyingonsocial media-baseddataminingto
discoverpotentialhitfactorsfortheirnextfilm.