Discover the real motives of Netflix by unveiling the big data stunt at the card house

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After winning the premiere of the MRC's "Solitaire" series in March 2011, the North American video web site's CEO, Ride Hastings, said in an interview with the US Tech blog website Sai that the card house was an attempt to Netflix is not interested in making the original content, but wants to attract more viewers by buying priority broadcasting rights, not to be a production party like HBO.

But by the year 2012, Jonathan Ferland, who was from Disney, served as chief liaison officer for Netflix, and Kelly Meriman, a former Warner International, began as Netflix's chief marketing officer in the second half. Two senior people familiar with the rules of the media have readjusted the market position of Netflix and the PR strategy of the card House online.

With the February 2013 premiere of the card house, a group of PR manuscripts were also launched in North America, with the theme in two directions, one to enlarge the role of data analysis, to explain why Netflix is willing to participate in the new MRC project (MRC is the main film investment, "card house" Is their first TV series, and the second is to package Netflix as a technical HBO. Such a strategy for stock investors in North America, effect is immediate, but also on the other side of the ocean in China has a very small impact, for a time, the various media to the "card House" highly concerned about the domestic Internet industry is the Netflix as an idol, to become a cultural field of the Geek-type representative.

In fact, the impact of the card house on the internal media industry in North America the analysis of the Internet data, as described in the PR draft, has nothing to do with the fact that Netflix really changed the revenue rules of the TV series, which was tightly controlled by several major media groups, through the card house and other premiere episodes, Netflix finally ripped a gap.

Change the flow of content to form the five major alliances

To help us better understand Netflix, first we need to take a serious look at the relationships between the North American entertainment industry's various participants (the middle column is the public television network). After 100 years of entanglement, today's North America, from content production to distribution platform, has reached a high degree of integration. The six media groups on the left of the chart constitute the absolute main force to meet the needs of the North American audience for entertainment, and in addition to the content production companies in these media groups, they also hold various distribution channels. In all distribution channels, the TV platform is still the largest area of profit space, so in addition to Sony, the other five large media groups divided public television stations, each also operates a different pay cable channels.

Television dramas produced by major studios usually appear for the first time on the single most profitable platform, such as public television or premium cable channels, where advertisements are placed in the drama, and some of them put advertisements before and after the episodes. A TV show will also offer pay-per-view television networks, then go to other free TV stations and release DVDs, before it turns to a monthly subscription streaming media platform such as Netflix and Amazon Instant video.

Netflix's original role was at the end of the whole content-changing chain, and the show was on Netflix for a long time before it was put on the line, and it had to pay higher royalties if it wanted to line up some popular episodes early, making the margins very limited. Netflix's annual revenue reached 4.37 billion in 2013, approaching HBO's annual income of $4.9 billion trillion, but only 13% of HBO's profits. According to the latest financial data, Netflix, the world's 41.4 million subscribers, had a single monthly output of about $8.55 in the first quarter of 2014, just 50% of the base charge for a popular cable channel in North America.

In order to circumvent the control of large media groups, Netflix has had to develop premiere episodes through independent studios in North America, which once relied solely on the distribution model of big media groups, and Netflix offered an extra option.

With a closer look at the list of partners in Netflix's premiere episode (pictured above), there is a little bit of an unclear link between Entertainment and News Corp's Fox, and other companies are largely independent of the six media groups. The cost of NETFLX is also considerable in winning the premiere of these episodes, the first quarter of the "card House" single set price is 4.5 million dollars, "women's prison" and "Hemlock Grove" also close to the single episode 4 million, even 30 minutes of the short set "development is blocked", the budget also exceeds each set of 2.5 million dollars, Add a small cost drama, "Lily", which is earlier on the line than "the card House", and the first 200 million dollars of Netflix's budget are basically spent.

For these independent studios in Hollywood, Netflix is a good buyer because it doesn't have to be a pilot and is free to create, and Netflix doesn't buy out the copyright of the series, which is basically a stage of playback right. For Netflix, the premiere of the series is much more strategic than the immediate profit-making, especially in a highly topical episode of the card house, where Netflix has made concessions in all respects when negotiating with MRC.

As for the Sony of the six media groups, because of the lack of television networks in North America under the laws of the United States, they have taken an active part in the international distribution of the card house, thus forming a process of content transformation from independent studios, Internet broadcasting platforms to international distribution channels. This process system has been completely independent of traditional television stations, but also with other large media groups have no relationship, so that the entire North American media industry as a shock.

The multi-screen era of IoT, the screen is the terminal, the content is the channel

Although the selection is very limited, but the first batch of Netflix's series is still carefully considered, the different episodes of the people in fact have a focus. The four main series, aimed at audiences of different genders and ages in North America (pictured below), and a small cost-making partnership with Norwegian studios, has been directed at Netflix into the immediate Nordic market. By 4+1 's combination, Netflix has tried to cover all audiences and to guide them to change their viewing habits, another reason for other big media groups to feel threatened.

In the 1964, McLuhan (Marshall Mcluhan), in the book "Understanding Media", put forward the idea of "media as information", and carefully contrasted the differences between the movie screen and television, and listed the differences between the film and TV programs. But at the time the TV was only more than 10 inches in size, and the audio-visual experience provided by the film show Room was two concepts (imagine how we felt when we watched TV in the early 80). After decades of development, now a variety of screens in the display quality is gradually converging, which makes the audience often in a variety of platforms to catch up with the same program, the content of their influence is far greater than the play platform of the shackles.

Netflix, 2011 years later, has come to realize that there is no real difference between itself and the television stations, and that the only thing that is different is that HBO, Showtime, AMC and other TV channels are constantly launching new episodes. TV stations help viewers make choices, dominate the production of the show, and then vote on the accuracy of this choice by audience ratings, making it an interaction between TV and viewers over a series of episodes that often become a collective carnival of advertisers, television stations and audiences. Netflix is more of a huge video warehouse, a bit deserted by the distraction of viewers ' interest, and a lack of enthusiasm and stickiness in the entrance to the Netflix warehouse.

Netflix's business model was severely challenged in 2012 when Amazon bypassed Netflix and reached a direct cooperation agreement with the main epix of the market, the Lion Gate, MGM, Paramount, and the company that won 2000 of films. Netflix relies on sheer size to be a bit awkward in the face of a growing number of rivals, so Netflix has to be a little different than the rest of the platform.

It is in this context that the 2013 premiere series on Netflix was given more meaning, not only to cover all audiences as much as possible, but also to continue to ferment some additional topics to boost investor confidence in Netflix. It is also through the rational layout of the content, as well as the most topic of the "card House" technology-oriented packaging, the influence of the series can be directly translated into Netflix's productivity. By 2013, Netflix had harvested about 10 million of its new subscribers, showing the power of the premiere series, which most viewers accepted as Netflix rather than Netflix.

If Netflix continues to expand its premiere series, one day the site could become the starting platform for all episodes, and the layout of large media groups on television will naturally lag behind one, and Netflix will be the dominant market leader. Fortunately, the major media groups are not worried at the moment, because the budget for Netflix to invest in premiere drama Development is limited.

The cost model is hidden, and Netflix's transition will take time.

While Netflix is subverting the traditional approach to content, it still has to contend with sustainable development issues due to the lack of profit margins. The existing monthly subscription method is the model that Netflix copied from the DVD rental era, the disadvantage of which is that the economic benefits of a single episode are very limited, and to maintain the stock of the content library, you have to pay higher royalties than the traditional TV stations.

To attract new paying subscribers, Netflix has taken a one-time online approach to the premiere episodes, rather than the weekly broadcast model like traditional television. According to the statistics of relevant agencies in North America, about 16% of Netflix users in North America viewed the card house within 72 hours of the second quarter of the card house, but only 2% of users watched a total of 13 episodes, a figure that was not prominent compared to some of the top-rated hits on cable television. So if Netflix wants to make an extra charge for a series, it may not be viable for the time being.

A careful analysis of Netflix's future reveals that the market for the premiere episodes is a double-edged sword. On the one hand, Netflix and HBO, Showtime and other cable television channels become direct competitors, this has to spend more cost to continue the incubation of content. On the other hand, in order to withstand the flank attacks of other streaming media platforms such as Amazon, the cost of copyright purchase that Netflix consumes every year is close to 50% of income, and this part of the cost will only continue to climb up and will not be lowered as the competition intensifies. When the cost of each link continues to climb, it will be difficult to maintain a net profit margin of only 5% per cent if the growth rate of new Netflix users slows again.

Just after the first quarter of last year's card house, with Netflix's share price being held up to $250 trillion and approaching Netflix's all-time highs, Hulu, another streaming media platform that was seen as a chicken of some big media groups, has reopened its owner, 21st Century Fox, NBC Universal, Disney's pro-Lai. The three group announced it would continue to inject 750 million dollars into Hulu, making it more competitive in content, perhaps an additional result that Netflix did not think of. For now, the big media groups that dominate television channels are still a high mountain for Netflix, and it may not be a good thing for Netflix, as it continues to wrap itself up, while it is also ringing alarms for the big crocodiles.

Catches, all Sihai, in the "card house" behind the North American media industry within the political strife, more noteworthy, it is another more exciting episodes. Netflix's crony, now just a start, can be seen as the pinnacle of power, as Francis of the card house.