David Bloom is a Deadline contributor.
You’d think a big new TV revenue source that has goosed income, built audiences and boosted marketing might be the favored guest at a show creator’s next holiday gathering, but that’s not necessarily the case, a panel of industry notables said today at a conference in Los Angeles. In fact, sometimes they spend as much time referring to Netflix as “the N word” as they do celebrating the good things it might do for their shows.
And there are some reasons for that ambivalence. As the streaming-video giant creates and markets more of its own shows, it creates branding problems and other conflicts for networks and producers with shows on the service. As Netflix pushes for the rights to run more recent shows, networks are pushing back. And as Netflix builds deeper knowledge about customer preferences, but doesn’t share enough of that data, distributors and creators have found new ways to be unhappy, even if they appreciate the very real benefits of their Netflix deals.
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“I think [Netflix is] the true definition of frenemy,” said Chuck Saftler, FX Networks’ COO and President of Program Strategy, during the The State Of Next Generation Television panel at the Ritz-Carlton Marina del Rey. “We make money when Sons of Anarchy is on Netflix. But as they put out more original content, and call House of Cards a Netflix original, and Orange Is The New Black a Netflix original (and mix that with messages about FX shows), that becomes a concern because it starts to lump our brand in with theirs.”
Netflix is following an expansion playbook pioneered by HBO 20 years ago when the pay channel disrupted a much younger cable business with high-quality, subscription-only original content. The difference is that Netflix is adding crucial pages to the playbook that are making TV execs nervous, given the implications for a large and unstable pay-TV financial structure. Where HBO expanded the pay-TV business with a significant new programming source, Netflix is ultimately competing against that industry with an inexpensive and popular alternative.
“Netflix is doing the same thing that HBO did, but it’s also disrupting the distributors,” said Core Media Group President Marc Graboff. “All of us are dependent on the billions of dollars that the pay-TV guys are paying to the networks that then filters down to us. But you have to skate to where the puck is going.”
The current deal battleground is over online rights to current-season programming. Back-season programming on streaming platforms provides a way for new fans to discover a show and catch up on the story line, which builds audience momentum and helps it thrive for years at a time, says Lionsgate TV Group Chairman Kevin Beggs, who pointed to Netflix’s powerful impact on his company’s Mad Men. But letting those online providers also have rights to the current season’s shows means that a network takes all the marketing and programming risk but doesn’t get the reward. “We just want to own the in-season experience,” FX’s Saftler said.
“The challenge [to doing that] is financial, because the value of Netflix [to a content creator] is going to be reduced if they feel like they’re not playing current season,” said Syfy President of Original Content Mark Stern . “It’s really just a different way to cut the pie.”
The panel, which also included BermanBraun President Jeff Berman, and Steven Canepa, General Manager of Global Media & Entertainment Industry at IBM, was part of Variety’s daylong conference-within-a-conference on tech and entertainment at Digital Hollywood, which runs through Thursday.