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David Poland

By David Poland poland@moviecitynews.com

Oprah As Metaphor For Netflix

“I’m every post-theatrical content opportunity… it’s all in me….”

As I was reading a NYT piece about Oprah tweeting that people with Nielsen boxes should turn in to the still-not-hot OWN, it occurred to me that Oprah’s current challenge is not unlike the current future challenge of Netflix.

She was the unquestionable leader in daytime television and given the cost of producing her show, was an unrelenting cash cow. But she decided to retire from that place and to take her cache and skills to a new cable net, built in in her name and image, OWN. But it isn’t the Oprah Winfrey Show Network. It is a network of shows that fit her sensibilities and interests. And what we have quickly learned is that it was the host and her relationship to viewers that drew massive and eagerly led crowds, not the sensibility of said host.

Netflix, like Oprah, created a brand and personality that has been very successful and sticky. They reinvented the Home Entertainment business by building it as a subscription offering, the basic notion being that if you wanted to see any film, all you has to do was to put it in your queue, and eventually it would land in your mailbox, shiny and DVD-like, and all for less than the cost of 4 monthly rentals at Blockbuster. What’s more… you could return yuor disc(s) and get (a) replacement(s) as often as you liked with no limitations. It was never a perfect system, but it was better than anything else that existed… unless for some reason you needed a specific film immediately.

But there was a serious roadblock to growing the company… the mail… and the increasing cost of postage. The very thing that started the revolution – cheap DVDs – was now in the way of expansion. Postal service is less consistent in other countries. And a smaller country couldn’t support the library costs that, say, the United States can. Plus, there are a ton of detailed impediments, like French and English preferences in Canada, effectively splitting the business in that country.

How can you overcome this problem? Streaming. No big inventories. Delivery of the content can be modified for any household anywhere in the world. No mail to deal with or pay for. And the increasingly ubiquitous nature of wi-fi, HD televisions, and the equipment to stream made this possible.

But like Oprah going from her personal show to a network of programming that mostly does not feature the network’s namesake, there is a paradigm shift for the business itself that is not easy to overcome. It’s almost the opposite of the Oprah situation… they have gone from being everything to everyone to being a programmed, narrower service, which is getting narrower monthly.

That doesn’t mean that I don’t think that Netflix cannot be a successful business on an ongoing basis… nor OWN. But what is clear to me is that expectations have to be changed… because both are operating in a quite different universe at this point. Netflix may well continue to expand internationally, making the company larger overall. But in the US, Netflix will become a smaller business for two reasons. First, as they continue to narrow content, they will lose customers who have some of the specific interests that are being jettisoned. Second, competition, including cost competition for streaming content, will continue to get harder, not easier. One way or the other, Netflix is likely to find its next realistic floor and ceiling in a couple of years, as standard business practices for streaming take hold.

Ironically, if Netflix launched today with its current content options, it would have a very hard time breaking through, even though it is easily the most complete streaming business in existence right now. I believe consumers are waiting for the rest of the shoes to drop before diving in head first. Of course, Netflix is out ahead of the pack and has at least 10 million subscribers who will not fall off of their roles simply because of inertia and comfort with the service. So it will be #1 for a long while… at least a couple of years. But Reed Hastings isn’t looking at 2013. He’s looking at 2015 and later. And the emphasis on “we’re like the new HBO” is about a narrower scale and the idea that people will still pay $9 a month or more for that HBO swath of content. Netflix too wants to be able to get away with saying, “We have more than enough content for this price.” And they do. For now.

But Netflix isn’t Oprah anymore. Unlike Oprah, they didn’t really have the option of staying in place and continuing to be king. So that part of the metaphor doesn’t work. But the rest…

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11 Responses to “Oprah As Metaphor For Netflix”

  1. Captain Celluloid says:

    Best Article Title EVER . . . .

    . . . and a good article at that.

  2. hcat says:

    “Ironically, if Netflix launched today with its current content options, it would have a very hard time breaking through”

    If Disney started today they would have trouble breaking through, or Apple. But since they were there at the beginning and created the templates the rest attempt to imitate they remain on top. I can’t imagine there would be an HBOGO if Netflix streaming had not been so successful. You always act like Netflix, which is in one in five households (not sure of the HBO numbers), has to somehow play catch-up.

    I do agree that Netflix’s future is unknown since the studios and networks still haven’t figured out what the future of content on the web looks like, but I see nothing that would warrent a comparision to Oprah, whose move was nothing but a hubristic cash grab in the belief that her name could sell anything. If Oprah is a metaphor for anything its Dreamworks.

  3. storymark says:

    No one but Poland is maintinging this “Netflix is for EVERYTHING” BS. A point mentioned by several people in every Netflix article run here – and always ignored.

  4. David Poland says:

    The reason, Storymark, that I don’t address your concern is that it is false and I am not looking to getting into a pissing match for sport.

    I wonder why you feel compelled to exaggerate what I wrote by putting it in all caps. Probably because you are trying to overstate what I said to try to make it false.

    But… Netflix DVD was pretty close to EVERYTHING. That was the model. Obviously they didn’t have every single thing. But there was a sense that the vast majority of mainstream DVD and a lot of alternate DVD was available in your queue.

    What is your argument there? Do you think the pitch was “We only have DVDs from half the studios and many indies with titles you’ve never heard of, so sign up now for unlimited DVDs!”?

    You can be in denial all you like about this company’s streaming content becoming severely limited compared to when it was launched. At the end of this month, it will – literally – stream ONE major studio of six.

    Do you think that reality has sunk in for subscribers? It will.

    If we did a survey today and asked customers who have been with Netflix for more than a year some yes/no questions, how do you think they would do?

    1. Does Netflix Streaming offer major studio content?

    2. Could you see any of the last 20 Academy Award winning movies via Netflix streaming?

    3. Did you subscribe to Netflix for a primarily television streaming experience?

    The reason Netflix continues to talk about HBO is that, indeed, Netflix has become limited – not by choice – to being a service comparable to HBO or Showtime or EPIX, with the additional benefit of a TV component.

    Or are you seriously arguing that what you get from Netflix today is what you got from Netflix 18 months ago?

    If you go to a great deli and ask for a corned beef sandwich and the waiter says, “sorry… we don’t do corned beef any more… but we have all the soup and chopped liver you can eat at a great price,” if you wanted soup and chopped liver, you’re golden. But if a deli isn’t doing deli meat, a lot of people are going to look for another deli. It still can be the best soup ever… but it’s change… and it’s not delusional.

    And hcat… Netflix isn’t quite in 1 in 5 households and their domestic paid subscriber numbers have been going down for 2 straight quarters.

    Netflix doesn’t have to catch up. But it is clearly in decline at this point and will not grow domestically again until it finds its bottom.

    Finally, the Oprah/DreamWorks thing is funny, since the thing that really buried DreamWorks 1.0 was investing too much in television at the start and losing most of that money… which is exactly where Netflix is headed right now, albeit with a much smaller investment. DreamWorks took a $400m hit in those first 3 years in business and never quite recovered. if they had never gotten into TV, they would never have been forced to do the deal with Paramount (in which DW raped and pillaged Viacom with skill).

  5. storymark says:

    Actually, it’s not so much my concern, David, as I was pointing out your bias. To my recollection, I have never brought it up before – but others have, many times, as I said.

    The caps was meant to highlight the frequency at which you make this erroneous clam, and ignore any who disagree or point out the falsehood.

    And how, exactly, amd I overstating what you said – when you come right back and repeat it again? Just wondering there.

    Yes, DVD was close to everything. Streaming is not, and they’ve never made that claim – no matter how many times you wish to repeat the false claim.

    Im not saying its a flawless business, or that they don’t have challenges ahead. I was simply making note of a certain pattern which you seem eager to continue.

  6. Paul D/Stella says:

    $8/month for unlimited streaming still seems like a great deal to me, even though the selection isn’t as wide as I’d like it to be. I’m more than happy to pay that to watch FNL episodes and a handful of movies each month.

  7. christian says:

    Eight bucks a month you cheap bastards. To watch Roddy McDowall’s only feature TAM LIN. Followed by the entire LARRY SANDERS series. Then THE SONG REMAINS THE SAME in HD. Eight bucks! That’s two mochas a month.

  8. hcat says:

    The Dreamworks/Oprah comparision would have been skipping the steps the other companies have made along the way in the belief that they could automatically pull a fully formed Studio/Channel out of their magic hat. Dreamworks wanted to create a major media company films/television/music label/and perhaps publishing? Instead of going one aspect at a time they rushed the gates, getting creamed in television and music (though there were outside obstructions) and ending up where they should have began, as a self sufficient production company with copywright ownership. Oprah could have easily tested the waters with some cable shows on one of the Discovery Networks, taking some prime time hours on TLC to test the response and build a viewership before moving some established shows to the new channel. But instead she thought she could just unleash the dogs of Oprah and the audience that followed her syndicated network programs would follow her to cable.

    I don’t see Netflix diving into anything this large, they are grabbing up a few series, now if they were producing a 100 hours in the next year. Yes catasrophe.

    As for your questions to the common consumer;

    1. Does Netflix Streaming offer major studio content?

    Answer: what is major studio content? movies right? Sure they have movies mostly older ones but they seem to have a lot.

    2. Could you see any of the last 20 Academy Award winning movies via Netflix streaming?

    Answer: I can’t name the last 20 Academy Award winners and those only goes to boring films that nobody has ever heard about anyway.

    3. Did you subscribe to Netflix for a primarily television streaming experience?

    Answer: No but it is turning out that way. I got to watch Greatest American Hero and Battlestar Galactica last week. Haven’t seen those in ages. Loved it. And they have enough Fraiser until I die. BUT WHERE”S FRIENDS!!!

    But I will acknowledge that you are right their content is going to lessen, and not just in streaming but on the DVD side as well. But given the amount of content they offer, will the regular person really notice? They try it out for free thinking they’ll watch a lot of movies and end up keeping it for the TV content. As others have said above, its a hell of a price point for that much access.

  9. yancyskancy says:

    People who use Netflix primarily as their source for home vid new releases will unavoidably be disappointed when/if it goes to all streaming content that doesn’t include most of the new releases. Duh.

    But for those of us whose appreciation of film and TV goes beyond what’s ‘hot,’ there’s a ton of great stuff available on Instant Watch, as Paul D and christian said. Certainly enough to make $8 a month a great deal.

  10. hcat says:

    They can always buy Universal, isn’t in Uni’s bylaws that they have to be sold every seven years or so?

  11. Lenny says:

    Very clever comparison! For me, it’s true that when Netflix first came out it was a great deal in comparison to the competition at the time. As Netflix has grown, expanded and even changed business models so have other companies. Since I work for DISH, I was able to watch from the inside as DISH acquired and revamped Blockbuster creating Blockbuster @Home. For $10 a month, I can now stream thousands of titles and I can rent DVDs, Blu-rays and video games. This rise in competition and I’m sure from other companies as well, will no doubt help to shrink Netflix’s customer basis in the U.S.. I am curious to see how competition will rise globally as Netflix continues to expand in these other regions.

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