Wednesday, September 18, 2013

Netflix' vision of their company and the future of television

Check out the Netflix Long Term View document for investors. It is interesting because it reveals their vision of the company and for the future of television in general.

As to the vision of the company, they say they are a "movie and TV series network." Note that they see themselves as a "network" -- will Netflix, YouTube, Amazon and the BBC become the new television networks?

But, they are not just a network, they are a "TV series network." That is a testament to their success producing multi-episode series for Internet distribution. People like to watch TV without commercials. They also like watching two, three or maybe all the episodes in one sitting. They like watching TV on phones, tablets, PCs or television sets whenever they want to.

Creators also like the artistic freedom and financial security of the Netflix format. They have the freedom to craft a long story. We can think of the Netflix series "House of Cards" as a 661 minute story, to be watched in one or several sittings. The 13 episodes vary from 46 to 56 minutes in length -- the writers are not constrained by time slots and commercial breaks. They could have created more or fewer episodes if they that was the best way to tell the story.

For more on a creator's view of Netflix, watch Kevin Spacey's excellent 2013 James MacTaggart Memorial Lecture 2013 (below). Spacey, who produced and starred in "House of Cards," says he pitched it to the TV networks and cable companies, but he went with Netflix because they gave him total creative control, funded 26 episodes up front and did not request a pilot episode. He feels that pilots are an expensive, misleading digression. He is producing very long stories with evolving characters, and trying to cram that into a single TV pilot or a two hour movie is impossible.

How about the Netflix vision of the future of television?

They sum it up saying that "While Internet TV is only a small percent of video viewing today, it will keep growing because:"
  • The Internet is getting faster, more reliable and more available;
  • Smart TV sales are increasing and eventually every TV will have Wifi and apps;
  • Smart TV adapters are getting better and cheaper;
  • Tablet and smartphone viewing is increasing;
  • Internet TV apps are improving through competition and frequent updates;
  • Streaming will be the leading source for 4k/UHD video;
  • Internet video advertising is becoming more personalized and relevant;
  • TV Everywhere provides a smooth economic transition for existing networks;
  • New entrants like Netflix are innovating rapidly and driving improvements.
Do you like "binging" on a commercial free TV series? (I just finished "Orange is the New Black"). Do you agree with Netflix' reasons for the future growth of IPTV? Are they enough to overcome the power of the incumbents?

Check out Kevin Spacey's lecture: