The 65th Annual Primetime Emmy Awards Show was different from all the previous shows. Of course, nothing seem out of the ordinary. Neil Patrick Harris did a fine job hosting. There was some controversy over the “In Memoriam” video for Corey Monteith, but there wasn’t much controversy elsewhere. The revolutionary difference between this year’s Emmy’s and the Emmy’s of the past are that this year, for the first time, shows released exclusively online were nominated for the awards. These shows were, of course, release by the industry’s online streaming giant, Netflix. The question I’d like to ask of Netflix is: “Is it worth it?”
Netflix has been around since 1997 and has provided online distribution as early as 1999, so it’s kind of surprising that it took until 2013 for Netflix to release its first batch of exclusively original content. Maybe it was their patience that paid off for them, as their four major releases this year, which cost hundreds of millions of dollars to produce, were heavily praised by critics and literally consumed by Netflix subscribers’ binge watching.
The releases from Netflix include the following titles: House of Cards, Hemlock Grove, Arrested Development, and Orange is the New Black. All but Orange is the new Black landed an Emmy Nomination, because the release date of Orange did not qualify it for a nomination, it was widely praised by critics landing a 79 score on Metacritic.com, the highest rating of all four shows. Even with the critical praise and heavy coverage among pop culture media, the amount of viewers who have watched any of these shows is unknown.
Promo video for Netflix Originals and their celebrated Emmy Nominations
No one is sure why Netflix won’t release the viewing numbers, but it appears that Netflix simply doesn’t want anyone to know, though they’d like us to believe the numbers are huge. Regardless, it doesn’t appear to be hurting the company as their third quarter earnings are up 10%. So not only is Netflix Original content critically successful, it is proving to be financially successful. For you skeptics, the addition of original content is, at the very least, correlating with an increase in quarterly earnings.
The issue here is that Netflix needs to worry about whether or not this early success will continue. Netflix prides itself on accommodating its subscribers by allowing them to binge watch all of their original content. This can lead to consumers subscribing to Netflix for one month, binge watching Netflix Originals, and then simply leaving the service. This kind of consumer behavior will not allow Netflix original content to continue to be profitable.
A spokesperson for Netflix commented in a Variety article saying this behavior “would create potential for price swings, given that this is a volatile stock, and accounting for content costs is a hot button issue.” This suggests that the Netflix “Binge Watch” business model for their original content may not be financially viable, and that they may need to try a different strategy, more along the lines of cable, with its one episode per week approach.
The irony behind this is that Netflix was believed to be the “cable killer,” and yet not only is Netflix talking about mirroring cable’s business strategy, but it is also in talks with Comcast to join as a possible service in a cable package. In this case, Netflix would be an add-on to the cable service you subscribe to, similar to HBO and Showtime. I think there is absolutely a demand for this, as Netflix’s 30 million subscribers are still subscribing to cable, making Netflix more of a complement to cable as opposed to a competitor.
If Netflix joins cable, however, it will become known as a just another premium cable channel, handing over all of its potential power to the cable companies. Personally, I’d find this incredibly disappointing. Netflix has an opportunity to change the way we view and pay for media content and I’m counting on them to make the right decision. Do you think Netflix should join cable or try to compete with them? Post your comments below.
– Mitch Ingstad