This post discusses, in its entirety, the first season of Netflix’s House of Cards.

Over the past two days, I watched all of Netflix’s most ambitious original series yet, a remake of the British miniseries House of Cards. While the show raises interesting questions about both television business models and narrative structures, and while it’s deeply entertaining to watch Kevin Spacey, as Democratic Majority Whip Frank Underwood, chomp scenery and occasionally on Kate Mara’s ambitious young reporter Zoe Barnes, I couldn’t help but feel that House of Cards has a fatal flaw. For all that the show looks attractive, and even half-authentic to the District sometimes, and for all House of Cards is trying its darndest to replicate the repellant chilliness of the British original, it’s actually far too nice to the people and institutions the show would like to skewer. And that’s because House of Cards itself falls prey to some of the kinds of thinking that are most pernicious in the nation’s capital.

Part of the problem is House of Cards‘ insistence that there’s a grandness, rather than a grandiosity, to Frank—while the show believes he’s malign, it’s still convinced that he’s Milton’s Satan rather than Dostoyevsky’s, who Arturo Perez-Reverte once described as “petty. A civil servant with dirty nails.” He declares in the first episode that “My job is to clear the pipes and keep the sludge moving,” and House of Cards seems largely to agree with his assessment. Frank may hold up an education bill to get a version that suits his ends, or derail the nomination of the man who was chosen to be Secretary of State over him, but he does get a bill to the President’s desk roughly on deadline, and once the other man is out of the way, speeds the confirmation of his hand-picked replacement. What really distinguishes him from his colleagues, however, and what the show portrays as the source of Frank’s efficacy, however unattractive it may be, is his treatment of power as a higher good than policy. “Leave ideology to the armchair generals,” he says in one of his many editorial asides to the camera. “It does me no good.”

House of Cards is full of acid portraits of people whose conviction has made them weak or duplicitous without being excellent at it. Even if the show has some sympathy for their dedication to and principal on the issues, it never gives them triumphs over Frank, and frequently suggests that passion makes them obvious, slow, or otherwise unfit to play the game that Frank has mastered so well, his competence overriding our moral calculus. During a subplot that involves the passage of a major education reform bill, Frank’s partner on the legislation, a life-long liberal reformer who’s a stand-in for the late Sen. Ted Kennedy turns out to be a naive patsy without the stomach for compromise or maneuver. “I could put my mind to policy, but I’m no good at this brand of politics,” the man tells Frank in agreeing to take the fall for a leak of his proposed bill that garners negative press coverage, and to let Frank take over writing the next draft. His actual ideas about the issues are never mentioned, simply summed up by Zoe as “very far left wing” for a headline. Somewhere in Massachusetts, Kennedy is rotating in his grave fast enough to dislodge the dirt above him so he can haunt House of Cards writer Beau Willimon for this perfidy.
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Over at Variety, Andrew Wallenstein has a very smart piece about how a central piece of Netflix’s business strategy may actually work against the company. One of the things Netflix facilitates is binge viewing, which in my case means watching an entire season of 30 Rock in a single day, but for most people means watching a couple of episodes of television at a time, instead of once a week the way they’d be released in their timeslots on television networks.

But when it comes to the shows it’s creating, rather than the ones it’s licensing multiple seasons of at once, that’s a problem. Netflix is releasing every episode of its seasons of Arrested Development and House of Cards at once. And at 14 episodes for Arrested Development and 13 episodes for House of Cards, that’s few enough episodes for people who are interested in just those shows, but untempted by the rest of Netflix’s offerings, to sign up for a free trial of the service, watch everything they want, and then quit before they have to start paying. Wallenstein explains:

A relationship with a program that might otherwise drag out over months on a linear channel is telescoped into hours. And therein lies the paradox inherent in Netflix’s business model: Allowing consumers to consume at their own speed contradicts the company’s financial imperative to keep them on the service paying the seductively cheap flat monthly fee of $8 for as many months as possible. Sure, it’s possible Netflix has assembled a library so vast — over 40,000 episodes of TV and counting — that a subscriber can fill countless months hopping from one binge experience to the next.

But let’s not forget that the whole point of Netflix embarking on an original programming strategy is to bring in new subs by offering a different value proposition. These are consumers who didn’t feel compelled to sign on to binge on library programming, but they’re interested in seeing a buzzed-about new show like “Cards,” and other originals still to come….It’s not like another original series will be waiting for them as soon as they’re done with “Cards.” The next series on Netflix’s slate of originals, Eli Roth’s “Hemlock Grove,” isn’t due until April and the revival of Fox’s “Arrested Development” doesn’t begin until May. Thus, getting new subs to pay for a second consecutive month of services becomes at least a little less likely.

This strategy gets even scarier given Deadline’s reporting that Netflix isn’t financing its original content development from original revenue streams, but at least partially from debt:

About $225M of the proceeds from the $500M offering it announced today — senior notes due in 2021 paying interest at 5.375% a year — will be used to retire the company’s $200M in 8.50% senior notes that are due in 2017. But with Netflix’s first original series, House Of Cards, making its debut on February 1, some investors wonder whether the company needs the remainder to help it handle its steep content payment commitments. Some $2.3B of Netflix’s $5.6B in streaming content obligations will come due in the current fiscal year, Wedbush Securities’ Michael Pachter says. The new debt, he believes, “is necessary to solve near-term cash flow problems, and indicates the low likelihood of positive cash flow for the year.” Netflix’s debt, along with its investments to expand overseas, make it “a risky investment.” Moody’s Investors Service also considers Netflix’s new debt to be risky, giving it a Ba3 rating. The debt assessment firm believes that some of the cash will be used to pay for “investments in original programming, which require more up-front cash payments” than library titles.

It may make sense for Netflix to bring in different tranches of customers with original and licensed programming. But to do it, I’d bet that long-term, the company’s going to have to raise its prices. And to keep up with escalating costs of licensing—particularly as Amazon continues to expand its efforts in this space, Netflix will have to pay just to keep a basic content library, rather than for exclusives—and of content production, those prices will have to keep rising. Netflix, like Hulu Plus, has largely been able to keep its prices stable, rather than subjecting customers to annual price hikes or hikes at the end of contracts a la most cable providers. Negotiating that shift may cost the company customers, too. But Netflix isn’t Amazon: it can’t subsidize its purchases and creation of content with a ton of other merchandise, or with a board that accepts essentially no profits. It’s going to have to come up with the money somehow.

The headline out of Netflix’s first appearance at the Television Critics Association press tour in Pasadena is that the streaming video service has produced 14 more episodes of the beloved cult hit Arrested Development, and will release them all in a single day on a to-be-announced day in May! But we already knew that the episodes were under production. The real news is that Netflix might have found its purpose as a creator of original programming with the Arrested Development experiment. Not resurrecting dead-but-beloved-or-even-merely-liked series, as seems to be the case every time a Terra Nova or a The Killing bites the dust. Not providing an employment program to Steven Van Zandt in between Springsteen tours. Rather, Netflix might just have found its niche in taking the logical step beyond the subject matter innovations of the Golden Age of television, and providing structural flexibility to television storytellers as well as room to tackle new subject material and in new tones.

To back up for a moment, the two most interesting things that Mitch Hurwitz, Arrested Development’s creator, explained about the Netflix episodes had nothing to do with what story they’d tell. Rather, he said first that the episodes would each focus on a different character, that they could be watched in no particular order, and that events in each episode would become clearer as viewers watched more of them. And second, he explained that some of them were different lengths, though they are all roughly thirty minutes long.

That first development is very significant. Television, for all that it’s developed beyond an episodic structure to tell long-arc narratives, is still a fundamentally linear storytelling mechanism. You may be able to marathon The Sopranos just fine, but you can’t shuffle up the order of episodes and have things make sense. A willingness to treat episodes like a series of interlinked short films that can be watched in multiple orders is something Netflix can do particularly because of its strategy of releasing all of the episodes of its shows at once, and because it doesn’t have to build and retain viewers episode to episode the way a network does to keep a reliable stream of advertising revenue flowing. And it means that Netflix could position itself as much better-suited than networks of any type to adapt not-strictly linear narratives with multiple perspectives. Before yesterday, my dream scenarios for Jennifer Egan’s novel A Visit From The Goon Squad involved the HBO adaptation, and for World War Z involved a series of stand-alone movies or mini-series episodes. Now, I’m excitedly thinking about what they might look like as Netflix series, a thought that has literally never occurred to me about any material before.
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Netflix’s attempts to develop original content has frequently been puzzling to me, given its focus on resurrecting dead masterpieces like Arrested Development, remaking masterpieces that don’t necessarily translate to new settings like House of Cards, keeping alive shows that no one really believed needed to be kept alive like Terra Nova. But its latest move, to outbid other competitors for Disney’s back and future catalogue, actually makes perfect sense to me:

The agreement is the first time one of Hollywood’s big studios has chosen Web streaming over pay television. Netflix has made similar “output” deals with smaller movie suppliers like DreamWorks Animation and the Weinstein Company. But all of the majors — Disney, Paramount, Universal, Warner Brothers, Sony and 20th Century Fox — have stayed with Starz, HBO or Showtime until now.

Library titles like “Dumbo,” “Alice in Wonderland” and “Pocahontas” will become available on Netflix immediately, Disney said. Netflix will begin streaming new release Disney films starting in late 2016, when the current accord with Starz expires. The deal announced on Tuesday includes direct-to-DVD movies…With the Disney deal, Netflix will be able to offer customers exclusive access to a pipeline of films that are reliably some of the year’s biggest box-office successes. Netflix has also made it a priority to strengthen its children’s and family offerings.

What’s smart about this is that it’s Netflix identifying an actual niche in the market. Hulu’s done this already in a lot of ways, doubling down on content that will appeal to serious television and film fans, whether it’s streaming foreign and foreign-language content like Hatufim, historical shows like Ironside, or even films from the Criterion collection. It’s true that Hulu is building its audience with a lot of tiny Legos, but the bricks in that wall don’t cost them a lot either, and it means they can easily adjust should one of those investments fail to pay off.

Investing in children’s and family programming is an unsexy way to build a firewall, but it’s an important one. Parents who want access to content for their children, but are worried about their youngesters wandering elsewhere in the cable lineup, or who don’t want to shell out cable prices when they only want some of the content, are a perfect audience for Netflix. And they’re a much clearer audience than whoever Netflix thought it was aiming Lillyhammer at. I don’t think it’s dumb for Netflix to experiment with original content. But until it figures out an actual successful strategy there, it makes much more sense to me for the company to spend $300 million a year on Disney content than for it to spend $100 million on 26 episodes of House of Cards

As Deadline notes, there’s a huge untapped potential to get more viewers watching streaming programming:

The research firm says that in September, 3.1M unique users streamed TV Everywhere programming at AT&T, Cox, Comcast (Xfinity), Verizon, Cablevision (Optimum), Time Warner Cable, and Dish Network. That comes to just 5.1% of the roughly 60M customers who could have accessed TV Everywhere videos at those companies. The data suggest “relatively weak TV Everywhere awareness among cable, DBS and telco video subs, most likely due to the lack of any serious marketing campaigns to promote the product,” analyst Tony Lenoir says. It also means the services have a long way to go to catch up to other streaming video providers. For example, Hulu had 21.3M unique users in September, while Netflix had 16.2M.

I actually think this could be a critical way to get customers to be quite loyal to cable. The streaming landscape is a deeply confusing place right now: on Hulu alone, NBC puts up everything the day after it airs, Fox delays episodes unless you’re a Hulu plus subscriber, and CBS holds everything on its own site, which has an unbelievably terrible proprietary streaming player. Then, there’s HBO GO, which is a stand-alone service to HBO subscribers, but that is slightly unreliable. And Showtime is working with cable providers to have Showtime Anytime service work through their streaming players. Netflix gets new seasons of things at uneven rates. That’s confusing even for an obsessive consumer like me. If RCN developed a streaming service that made all content available on a consistent basis, with extremely high-quality visuals and fast-loading streaming, that alone would make me affirmatively loyal to the company for the first time in my career as an adult cable consumer. And I bet it would be a real value ad for people who don’t spend ten hours a day watching television and movies.

The kind folks at Bloggingheads were good enough to ask me to do a regular show over there, which means you’ll be getting a lot more culture alongside your politics. I’m lucky enough to have as my first guest the AV Club’s television editor and one of my absolute favorite writers on any facet of culture, Todd VanDerWerff:

There’s a lot in this conversation, including a discussion that I think is really important: which networks and services see themselves as in competition with each other. If HBO, Netflix and FX see themselves in competition with each other, it’ll have a dramatic impact on which movies and premium programming are available elsewhere. Networks like Showtime are in an interesting position here—if they’re not in direct competition with Netflix, there may be fewer pressures on them to invest in streaming products like Showtime Anytime, which it’s preparing to roll out more widely to customers of more cable providers, but it needs to not make the strategic mistake of restricting access to its content to the viewers who might need to sample it to get hooked and subscribe. This is really about the integration of two existing industries—movies and television. And the space for a more truly disruptive product, like Hulu, is wide open.

In any case, I hope you’ll swing by. And if you have requests for folks I should have on the show, holler. I’m excited to spend a lot more time talking to my critic friends, and not only at great length on Twitter.

One of the pieces of conventional wisdom about Netflix and its competitors in pay cable is that cracking the international markets would let them keep costs lower in the United States by monetizing individual pieces of content on a much broader scale. But The Hollywood Reporter’s wrapup of the financial reaction to Netflix’s quarterly earnings report has this interesting and important observation from “SIG Susquehanna Financial Group: “Internationally, challenges appear to persist in Latin America. Management highlighted low device penetration, insufficient Internet infrastructure, and consumer payment challenges as the main obstacles. We think these are necessary but insufficient conditions. Netflix may be too early and the consumer isn’t ready: pay TV penetration in Brazil, Mexico, and Argentina is currently around the levels the US reached in 1980 (one year after ESPN was launched and one year before MTV started), 1990, and 1994, respectively.”

I think I’d expected the broadband and device issues, but the low pay cable penetration rates came as something of a surprise to me. The Emmys this year, and the critical consensus of a decade, cement the idea in the United States that cable is where momentum in television lies. And I think our sense of the landscape and what audiences crave and can afford is somewhat distorted by the excellence of British programming, particularly that which plays in syndication overseas. That’s not to say that international audiences are less sophisticated, or producing content of lower quality, or that shows like Game of Thrones don’t do well when they’re syndicated to audiences that are prepared to embrace them. But it’s a reminder that while there might be gold in them thar hills, it may be some time before it’s actually possible for companies to excavate it, and for them to reap the rewards we expect will keep our prices low and make it possible for companies to experiment with new business models.

I think James Poniewozik is largely correct that while the networks may be upset about new technologies that let viewers skip ads, they might be better off trying to find fee structures that are responsive to new technologies:

But they want—and a good business would provide—many more ways of paying, if not with their eyeball attention to ads, then with money. (There’s the possibility, for instance, that networks could raise fees to networks like Dish that offer ad-zappers, which fees could be passed along to those who ad-zap, to replace lost ad revenue.) People want to be able to buy episodes, subscribe to shows, watch on their own schedule, and bypass ads they don’t want. In the process, the relationship of people to TV networks will change: right now, networks’ true “customers” are the advertisers, because they’re the ones who pay money.

The TV business is changing from one with a single main revenue source to one with a lot of them; the transition is bound to be painful for the networks. But quashing an option your consumers want is the wrong way to forestall that pain. You can’t pull the plug on technology forever, and if that’s your best response to change, it’s your own fault when consumers start tuning you out.

I also think this is easier in theory than in practice, and is going to take years to sort out. One important experiment will be to see how consumers respond to a Netflix or Hulu Plus pricing scheme that’s more reflective of the actual cost of supporting that content and the production of higher-quality original content. A second step will be to see how consumers behave if they’re faced with regular but reasonable hikes in the prices of those services, which are responsive to both renegotiated content contracts and rising wages and costs. I would like for it to be true that people are willing to pay for content at a cost that will support a fairly diverse array of high-quality programming, but as I’ve written before, we don’t actually have proof of a viable financial model yet, and it’s not wrong for the networks to be cautious about blowing up an existing business model in favor of optimistic projections.

We have a sense of what we’ll pay for three distinct products in this market. First, there’s what people will pay for bundled cable, both in terms of what prices will get them in the door and what prices won’t lead them to quit at the end of a first-year contract. We also have a sense of what we’ll pay for a single episode of television, because iTunes and Amazon have established that price for consumers much in the way cable companies did. And we know we’ll pay $8-$30 a month for streaming video and DVD exchange services. As consumers, I think we have little sense of the ad revenue we’d have to make up if we were to replace advertisers as networks’ customers. I’d be excited to see a good experiment in how to price out new models, but it would take serious negotiation between distributors and the networks to set one up, and it would need to include both coastal and rural consumers to account for differences in broadband penetration and avoid preference bias. If folks have ideas on how to make such an experiment work, leave them in comments. It’s time to start thinking beyond the simple idea that evolution is good and important, and start talking in greater detail about how we get there.

When the Hollywood Reporter noted yesterday that My Damn Channel, an online television network, had unveiled a slate full of original content, it clarified a major problem with web television for me. While YouTube’s channels, like Felicia Day’s Geek & Sundry, will aggregate some similar tranches of web programming, so many of the best shows live off in their own isolated spaces, word of them traveling by word of mouth. I’d watch vastly more web television shows if there was a single place I could find a lot of them, sorted by topic, or theme, or programmed into something approaching harmony. And I wonder why, in their pushes into original programming, Hulu, Netflix, and Amazon haven’t focused more on true web television and less on an arms race with networks that have an enormous advantage over them in production and advertising budgets (Google is, to be fair, spending $200 million advertising its YouTube channels) and savvy.

Much of what these online content providers seem to be doing so far is feeding off scraps or trying to capture old magic. When Terra Nova was cancelled, there were rumors Netflix might pick it up even though it was immediately and obviously a terrible proposition. Its remake of House of Cards, helmed by David Fincher, lacks a creative rationale and is a hugely expensive attempt to purchase the kind of credibility that so many British shows arrive in the states armored in. The Arrested Development reboot is about satisfying an old core audience rather than building a new one. This is a defensive strategy rather than an offensive one. Hulu’s been trying to play offense, but its new shows have no built-in audience unless you count Morgan Spurlock diehards.

Acquiring or distributing existing web TV franchises would be a more modest first step, but it makes sense for a lot of reasons. First, it would be a lower-cost way to bring existing fans of a program to Netflix, Hulu, or Amazon’s streaming site, and in a way that has the potential to be sticky if people jump from a show they already like to one they aren’t familiar with. Second, and this is important, web series offer the potential to catch audience growth on the upswing, rather than the downswing. While this isn’t true for all web series, shows like Jane Espenson’s Husbands can work as individual episodes or, watched all together, as a test pilot. Web shows could be a way for Hulu, Netflix, or Amazon to grow an initial audience and figure out which shows are their best investment bets to level up to full series, and then allocate their production and advertising budgets to shows and showrunners with proven track records in this format.

This is a more modest, less fast way to compete with the networks. But ultimately, it’s hard to believe that the streaming services will truly be able to match network content. They’re viable precisely because people want to pay less for content, and so the streaming services’ best bet is not to try to stretch those dollars threadbare, but to use them to build something entirely different. Google seems to get this. Everyone else? Not so much yet.

Once upon a time, rumor had it we were going to get a show called Ripper that spun off Anthony Stewart Head’s character from Buffy the Vampire Slayer that would follow the former Watcher back home to England where he’d get up to a variety of supernatural skulduggery. The Buffy Season Eight and Nine comic books have seemed to have foreclosed that possibility—Angel, Buffy’s vampire-with-a-soul sometime lover did kill Giles by snapping his neck. But the Mary Sue makes it sound like a Ripper show, or even just a show with Anthony Stewart Head and magic, from Whedon might be a possibility again, this time on the BBC. The project, if it ever were to happen, actually sounds like the kind of thing that Netflix ought to be all over.

Currently, Netflix has been all over continuation of cancelled series like Arrested Development, remakes of well-regarded programs with high-priced talent attached like House of Lies, and deeply random original series like Lillyhammer, which just got renewed for a second season. It’s a combination of daring shots in the dark and utterly conservative programming. Something like a Whedon-Head reteam would let Netflix walk a middle path. The show would attract a dedicated fan base, but it would also be an original project, one that wouldn’t absolutely require hardcore membership in the Buffy or Angel fandom. It’s the kind of project that might work well with a shorter order than a network season, something that Netflix seems to be focusing on. And unlike Netflix’s other original projects, this would be one that critics actually created a buzz around. The whole project may be a pipe dream. But it would be less silly than Netflix spending even 30 seconds considering keeping Terra Nova alive.