For movie and TV buffs, like me, there hasn’t been a service that has blown me away more in my life than Netflix. So many movies and shows that I’ve never seen, meant to watch, or have been haggled by friends to start watching because I would “looooove it” have become a reality because of their instant streaming service. It’s almost redundant to explain, because 33.3 million people subscribe to it, but Netflix has eliminated cable for many people because of its $8 a month charge and seemingly insurmountable library. But in a recent interview GQ magazine conducted with CEO of Netflix, Reed Hastings, he made a statement that served as the ding for round one of what will become a massive fight between two TV and film juggernauts: “The goal is to become HBO faster than HBO can become us.”
That’s a heck of a battle cry considering HBO has more than triple the subscribers than Netflix, at 114 million, but Hastings wasn’t talking exclusively about the viewer base. HBO has been known since the early 2000’s, with the creation of shows like “The Wire” and “The Sopranos,” for having deep, character driven, award winning programming that is unmatched by basic cable programming. This has been perpetually proven, because HBO has won more Emmy awards than any other network for 11 years in a row, winning 23 last year. It’s hard to compete with HBO when they can fund a gawdy gangster show like “Boardwalk Empire” or the fantasy epic “Game of Thrones” and never worry about language, nudity or violence and focus on the story instead.
And that’s the one thing making Netflix what it is instead of being prestigious like HBO: quality original programming. Netflix made an effort towards this last year when they opted to pick up a new season of Fox’s once-cancelled cult comedy “Arrested Development,” but they didn’t take a stab at original programming until just recently with their $100M “House of Cards.”
It’s important to mention here that one of the addictive things about Netflix, which any subscriber can vouch for, is not having to wait another week for the next episode. I know plenty of people, including myself, that have spent an entire evening polishing off a season of whatever show we’re currently hooked on. Netflix decided to capitalize on this with “House of Cards” by filming two 13 episode seasons and releasing every episode of the first season at the same time a few weeks ago. Backed with Oscar winner Kevin Spacey (The Usual Suspects, LA Confidential) as the lead, and with the first two episodes directed by David Fincher (The Social Network, Fight Club), Hastings and crew packed big names into the show to draw some buzz around their first massively produced original show.
Whether or not this effort will work is still up in the air, and answers won’t be clear until significant change in Netflix subscriptions is seen. The more important question is whether or not Netflix has shot themselves in the foot at the start of the fiscal year. Despite the size of the investment, TheAtlanticWire.com points out that it’s daunting, but not super risky. At a $7.99 subscription fee, Netflix needs 520,834 people to sign up for two years to break even on “House of Cards.” Consider now that Hastings wants Netflix to produce five original shows per year to make the service more like HBO, so they need more than 2.6 million new subscribers just to cover the cost of these original projects. With overseas costs, it’s doable, but the gamble is assuming these shows will draw people in. It’s easier to predict the weather than it is to tell which shows are going to be a hit, and if you’re producing two whole seasons at once instead being able to pull the plug after a few episodes like major networks, then it’s potentially a very expensive failure.
HBO takes these gambles as well, but they’ve got a much bigger financial safety net. Although consumers pay roughly $15 for HBO, and even more for sister networks like Showtime and Cinemax, The Economist reported that HBO splits any fee with the cable company 50/50. Again, considering HBO’s 114 million subscribers and more being added on their Netflix-like HBO Go streaming service, HBO can afford to spend an alleged $5 million an episode on “True Blood” or get stars like Nicole Kidman and Clive Owen to be in TV movies like “Hemingway & Gellhorn.”
Regardless of the premium cable brawl to follow, both services have taken different roads to offering the same service. Both want to be a haven for movies ranging from blockbuster to cult classic, and both want to have original content that establishes them as a unique brand from their watered down, basic cable counter parts. The next move will be on Netflix after they see how their subscription rate changes after the hubbub around “House of Cards” has died down. Even if it’s not a major hit, it won’t stop them from trying until they get their “Homeland” or “Game of Thrones” equivalent. For us viewers it’s a win/win because we have two major distributors hoping to make the next big TV show. All we have to do is watch.
Where do you stand on the Netflix/HBO battleground? Do you have one, both, or neither?