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The Economics of Netflix's $100 Million Show

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Re: The Economics of Netflix's $100 Million Show

#41

I don't think its just a matter of economics, Netflix doesn't have a choice if they have to survive long-term. Thanks to the internet, the power is shifting from content providers to content creators and they risk turning into a dumb pipe at the mercy of whimsical broadcasters who can choose to stream their show directly to their viewers. Reed Hastings has said that it is a race for how fast Netflix can become HBO be…

[deleted]

Re: The Economics of Netflix's $100 Million Show

#42
post #5

I'm really hoping this works. Partially because I'm a Netflix subscriber, but mostly because I want HBO, AMC, and Showtime to follow suit eventually. If Netflix shows that they can support a high-profile show with a subscription model, maybe non-cable subscribers can eventually get HBO. Or am I just dreaming?

You want to pay $9 * N content providers per month? I don't.

In a heartbeat.

Re: The Economics of Netflix's $100 Million Show

#43
post #27

Netflix accomplished two things: 1. They muscled into the "prestige television" club for $100MM. It may be overpriced, or it may be underpriced, either way it's very good for consumers. 2. They validated television is the new book. You gorge on 13 hours of good television the same way you gorge on 13 chapters of a good book. This is very good for show creators. A triple win aligning interests while getting to say f-y…

Hmm, television as a book. I get the analogy. It's kind of like applying book serialization to video. You quickly read a book and as many sequels exist when you first pick it up. Then you have to wait for the next season, i.e. book, to come out.

Seems to me like the costs are wildly different though.

Re: The Economics of Netflix's $100 Million Show

#44
post #30

> With Netflix spending a reported $100 million to produce two 13-episode seasons of House of Cards, they need 520,834 people to sign up for a $7.99 subscription for two years to break even. Isn't that ignoring profit vs income?

When Netflix owns the content, their marginal costs per subscriber are near zero -- essentially just bandwidth and compute fees.

Re: The Economics of Netflix's $100 Million Show

#45
post #18

I'm not a fan of political shows. That said, I decided to watch House of Cards last night. It's not bad. Having Kevin Spacey as the lead is good. There's a good cast of supporting actors too. The writing is a bit mundane, but not terrible. I know the show is somewhat of a remake of a BBC show from a while back, but I never watched it so my take is purely on this experience. I plan on watching the rest of it. It was i…

> It's not bad. Having Kevin Spacey as the lead is good.

I like the show, but Kevin Spacey's southern accent is so terrible it is distracting. I normally wouldn't care, but my I grew up in the Carolinas and he sounds nothing like any person or politician from the area. He needs to drop the accent as it takes away from the rest of his performance.

If they wanted a correct southern accent they should have hired Kyle Chandler.

Re: The Economics of Netflix's $100 Million Show

#46
post #5

I'm really hoping this works. Partially because I'm a Netflix subscriber, but mostly because I want HBO, AMC, and Showtime to follow suit eventually. If Netflix shows that they can support a high-profile show with a subscription model, maybe non-cable subscribers can eventually get HBO. Or am I just dreaming?

If this works Netflix will buy what's left of HBO in a few years.

Re: The Economics of Netflix's $100 Million Show

#47

Earlier quoted context omitted.

You want to pay $9 * N content providers per month? I don't.

You wouldn't? I totally would. Seems like a cable package that includes premium content (HBO, etc.) runs at least $100 per month. If I could ditch the cable and instead get 11 HBO-quality content providers (which is much better than I get from cable), that would be a no-brainer. More likely, I would get half as many, and end up with more solid content than I have time to watch, for much less money.

Dish Network starts at $50/mo plus $18 for HBO. Once you start adding up streaming subscriptions and season passes to fill in the gaps, you're looking at a similar price.

Re: The Economics of Netflix's $100 Million Show

#48

"it could turn around and sell syndication rights to networks and overseas." Very unlikely since Netflix is planning to further expand abroad and the key in their business is exclusivity... The math in this post is bogus since it's only based on incremental revenue brought by new subscribers. Getting more exclusive content does not only bring new subscribers, it also increases retention. I think the real news is not…

Netflix is available in Norway, but House of Cards will also run on a cable channel in March

Re: The Economics of Netflix's $100 Million Show

#49
Even if $100mm seems a bit much for the show, Netflix's first entry into the exclusive content business had to be a hit. Once they've established themselves with quality content, they can later add some less expensive content without harming their reputation.

I'm interested to see how well House of Cards does and if it becomes popular enough for them to afford more exclusive content as well as negotiating lower content costs from other publishers.

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