Musings about Netflix' House of Cards

When I wrote my Tweet about House of Cards, I had no idea it would be so successful, retweeted and favorited so much.

I'll save for a drinks or dinner discussion why I think it resonated with you, and the followers of my followers.

For now, I want to share with more than 140 characters what I wanted to develop, and what lessons I see in Netflix' House of Cards.

1. Content rules

At the heart of 'House of Cards' is an excellent story, well told and delivered. Well acted, well written, well presented.

Despite some observations of a few of my followers, I doubt that data analytics have anything to do with the inspiration of the writers of the show.

Sure, I grant you that some level of market analysis must have gone to track the TV trends which are compelling these days. The wave of zombies movies and TV shows is surely a sign that when content marketers see a trend, they measure it, track it, replicate it.

But, in Hollywood, New-York, and any digital shop out there, a good story, a good writer have been, are, and will always be the life blood of the industry (not that they are the highest paid of the food chain... but that is a different debate).

Consumers and audiences, us humans, really, have always been mesmerized and captivated by a good story. It fuels our imagination, it propels us to project ourselves outside of our reality. 

Content is a legal drug which we cannot wane ourselves from.

So, in the decade ahead as the content distribution business evolves, we, technologists, must remain humble and continue to recognize that the greatest attractor of eyeballs to our technology innovations will actually be content, and stories, not whether our gimmicks and toys are cool.

2. Format innovation

This does not mean that we, technologists, are not going to bring innovation to the table.

The best area of technology-powered innovation I see, is what I call "content packaging", or "content formats".

By "format" I do not mean video encoding format, or resolution format (16x9, UltraHD etc).

I mean the innovation which comes from how a story is told.

The jump from the broadcast main event, to a follow-on broadcast show where the anchor interviews cast members. AMC leads the way here, with the Walking Dead and the Talking Dead.

The pivot into conversations with the actors on Twitter, maybe followed by unseen footage, cut scenes available on-demand on your tablet...

Netflix version of this "content format" innovation is in the delivery of "binge TV", with all episodes of a show season released at the same time. I suspect that Netflix is working on more exciting ways to innovate in content formats.

Broadcasters, programmers, studios and over-the-top players are also testing the waters, and trying to measure what resonates with audiences. The primary axis of their content format innovation are, for now, 2nd screen experiences and apps, synchronized or not.

The only 2nd screen synchronized application platform I see out there capable to make a dent in the marketplace is actually Shazam. But more on that in a future post.

The next decade will thus be about innovation and experimentation in content formats.

3. A decade of experimentation

I say a decade, because we, technologists, must also remain humble.

We need to accept and realize that it will take at least one decade for consumer behaviors to change at scale, with all those new content format innovations being tested.

For it to matter (economically, to the advisers), I posit that we need to reach at least 40% of the population to engage with a TV show on a second screen on a consistent, sustainable basis for it to matter... i.e. so that the digital dimes turn into digital dollars.

For now, for the foreseeable future, we will continue to see low percentage penetrations on all those experiments until broadcasters and marketers understand what works, and what doesn't.

Nielsen reports that, apart for the major sports events (SuperBowl and sports leagues finals), most of the sports events generate just a few million tweets. Successful shows like Glee garner up to 800,000 tweets per show...

We have a long way to go until those new content formats and engagement platforms become real eyeball aggregators having real economic power.

4. Marketing good content remains expensive in a digital world

At the same time, marketing quality content will continue to require a lot of money to reach mass scale audiences.

Therein lies the (valid) argument which the cable industry is making to the legislator, in asserting that "a la carte" does not work.

In other terms, big commercial content successes are needed to pump enough money in the system to fund the creation of more niche content.

If the benefits of such large content successes were kept in the legal entity created for its production, no studio or programmer would step up to produce a show like "Looking", for example.

Studios like Warner Brothers are, yes, experimenting with low budget, high quality, made for the web productions.

But I see this as internal R&D experimentation, targeted at learning what it takes to prepare for such times, if they come ahead, where they may be forced to produce "cheap" high quality content.

So the stage is set for the large content companies and distributors to assert their might, and continue to sway great negotiation power on the industry.

Small, independent production companies will remain small, and can only hope to be acquired, in the decade ahead.

Finally, the Silicon Valley does not know how (or want) to fund content, and I don't see that changing any time soon.

5. Digital dimes ramp-up slowly

In conclusion, I thus see a slow, decade-long march, which will take us from a "digital dimes to digital dollars" world.

It will take time, surely.

It will take an un-coordinated movement from all the pieces of the industry to slowly refine their weapons: 

(i) the advertising industry to refine its definitions, measurement and tracking of "engagement"

(ii) the advertisers to refine their organizational understanding of the digital world, which has been kept opaque from them, voluntarily, by their ad agencies

(iii) the content producers and programmers to refine their understanding of consumer usage of the new content formats

(iv) the distributors to refine their technologies in service of the new content formats

All of those actors will then start expressing, during their annual advertising contracts negotiations, the "digital revenues", separately from, and with measured metrics, the traditional broadcast dollars. I don't see that happen until 3 to 4 years out, though.

The pieces of the puzzle are starting to emerge.

And I am happy to help you shape your path in the digital woods.