I don't get it- you are right, this isn't part of their core competency. And, that's why they were smart to only buy one show, with two big names attached to it. They are reducing their risk and seeing if they can play in the content game. If yes, they will likely buy a few more shows and grow that competency.
Actually they are not reducing their risk by keeping the number of shows low. Here is why:
Upto 211 degrees, nothing happens. At 212 degrees, water boils.
Similarly, will 1 good show make a lot of people subscribe to Netflix? Even if the show is orgasmic - I doubt it. There is no momentum here. No tipping point. 2 shows won't do it either.
I don't know what the minimum number of new shows is that would get a lot of folks to subscribe. But for myself, I would put it near 12 or so.
If Netflix wanted to reduce their risk, they should have targeted niches that are not so expensive. Mainstream entertainment is not a good idea to start with. Something like History channel or World Travel is.
But going with low risk niches, would not generate so much publicity for them. Would not make the studios and cable companies take notice. Netflix is in a fight with them - and so this is a strategic move to get noticed. Not a risk reduction move.
Netflix is not trying to grow their subscription base.
The "risk" to which he was referring to is the risk of the show failing completely by some metric (e.g. no one currently subscribed to netflix is watching it), and all that money being effectively flushed down the drain.
It's the risk of going overbudget. Or the risk of actors and directors having a falling out.
There's dozens of factors that go into making a show successful and this test is to see how Netflix as a company can handle them--either directly or by proxy. If this test is reasonably successful then maybe in the future, they will make a play to have original content garner them more subscribers as a competitor/partner to say HBO or Showtime.
- Risk of actors or directors having a fall out. (Or something else occurring that makes episodes not coming out on time if at all.)
And you make a good point that thats why Netflix is trying with 1 show and not 10.
But aren't all these risks you listed further minimized by experimenting with a $10 million show than a $100 million show?
My thinking is: Netflix does not care about risk at all. If they wanted to minimize risk, they would have gone with lower priced shows. Or they would have gone with a lot more shows. The only reason they have gone after a high priced mainstream show is as a negotiation tactic. To make a stand against studios and cable companies. "Play ball with us. Because if we can't play together, we will compete together."
Outright rejecting ideas because they're not part of your core competency is a growth-limiting position to take. Core competencies can get commoditized over time. If you don't skate to the next thing, you wither and die.
