#netflix

Despite the huge swings in our stock price since our 2002 IPO ($8 to $3 to $39 to $8 to $300 to $55 to $330), we’ve continued to grow our membership every year fairly steadily. We do our best to ignore the volatility in our stock. The progress we’ve made over the last 10 years is stunning. We want to make the next 10 years even more remarkable.

Reed Hastings, after Netflix beat quarterly estimates once again, sending the stock soaring to new all-time highs.

You could certainly argue that Netflix is an even more volatile stock than Apple — because it clearly is. And Hastings is smart to try to calm the furor in a time of exuberance. You’re never neither as good nor as bad as they say you are — but you can only really say that when they’re saying you’re good.

Joan E. Solsman:

Netflix will be streaming art-house heavyweight films alongside Disney superhero blockbusters before any other pay-TV services in a few years. The company unveiled a deal Tuesday to be the exclusive U.S. subscription TV provider to stream first-run movies from the Weinstein Co. starting in 2016. Last year, Netflix notched its first agreement with one of the top six film studios, Disney, to be the only U.S. subscription TV service offering relatively newer movies from Pixar, Marvel, Walt Disney Animation, and Disneynature. The Weinstein agreement Tuesday brings Netflix an independent-film studio powerhouse to complement the Disney content.

Massive deal for Netflix.

David Carr:

The Emmys were the most prominent marker of change, but hardly the only one, in a week full of headlines about what TV is becoming. It’s not their first foray, but if Apple and Google move further into the television space, they are sure to collide with not only traditional players, but Netflix, Amazon, Sony and Intel. And Aereo, which so far is a small but persistent player backed by Barry Diller, won another court victory for its plan to totally upend broadcast networks, by streaming their content without compensating them.

Meanwhile, what were the traditional television players up to? Squabbling yet again over retransmission fees, with a standoff between CBS and Time Warner Cable that could set off a blackout, driving audiences to other ways of viewing. The only constant was steady price hikes on cable bills.

Said another way: the incumbents aren’t just fiddling while Rome burns, they’re playing with matches…

Also, a nice tidbit from David Bianculli, a professor at Rowan University:

“It took HBO 25 years to get its first Emmy nomination; it took Netflix six months,” he said. In that sense, Netflix is more like Pixar than Hulu, showing that a Silicon Valley company could produce creative, successful programming.

Liz Shannon Miller on Netflix’s new show Orange Is the New Black:

Here’s the highest compliment I can pay: Other Netflix series have left me excited for more Kevin Spacey political scheming or Bluth family antics. But Orange is the first time that I’ve finished watching a show and been excited about what Netflix might release next.

The original content strategy appears to be working quite well…

Great profile of Reed Hastings by Ashlee Vance for Bloomberg Businessweek. Three standouts:

The master copies of all the shows and movies available to Netflix take up 3.14 petabytes of storage space. (In comparison, Facebook uses about 1.5 petabytes to store about 10 billion photos.) Hollywood studios used to send individual films and shows to Netflix on a disc or thumb drive; now they use a Netflix system called Backlot to send encrypted files via the Internet. Netflix then compresses the files and creates more than 100 different versions, each tuned for the varying bandwidth, device, and language needs of its customers. (An hour of video for the iPhone would be about 150 megabytes.) This compressed catalog comes to about 2.75 petabytes.

Wow — also, Pi.

And:

Netflix began to experiment with cloud services from Amazon and Microsoft, where Hastings served as a board member. In 2009 he bet his company’s future on Amazon. Up to that point, nothing the size of Netflix had placed so much of its crucial technology on Amazon’s systems. Hastings sent an e-mail to Amazon CEO Jeff Bezos, announcing his plans. “I asked him if he was comfortable with that idea,” Hastings says. “If not, there was no point going forward.” Bezos gave the go-ahead.

That seems like a pretty large diss of a company where he’s a board member — especially when you consider that Amazon is now a very direct rival.

And finally, the best for last:

Qwikster was a fiasco, but far less threatening than a debacle that preceded it. In August 2008, Netflix’s technology infrastructure melted down. This was when the company was still known for DVDs-by-mail, and for three days it could not send discs because a crucial Oracle database kept malfunctioning. Reporters and customers took notice. Netflix traced the problem to an expensive, third-party storage system that went haywire after a software update. The incident still annoys Hastings. When the subject comes up in the watchtower, Chief Product Officer Neil Hunt, who’s also gathered at the table, suggests they not mention the storage-system vendor by name. Hastings responds, “Let IBM have it, baby.” (An IBM spokesman declined to comment.)

Said another way.

Peter Kafka for AllThingsD:

Good news for Netflix! The company streamed more than 4 billion hours of video in the first three months of the year, according to a Facebook post from CEO Reed Hastings.

BTIG analyst Rich Greenfield crunches those numbers (registration required), and concludes that this makes Netflix the equivalent of the most-watched cable TV network: He figures there are 28 million U.S. Netflix subscribers watching an average of 87 minutes of Netflix per day, or 43 hours per month. That puts it on par with the Disney Channel.

The future continues to reveal itself.

Willa Paskin of Wired dives into the business behind the resurrection of Arrested Development on Netflix:

Whatever our televisual drug of choice—Battle­star Galactica, The Wire, Homeland—we’ve all put off errands and bedtime to watch just one more, a thrilling, draining, dream-­influencing immersion experience that has become the standard way to consume certain TV programs. We’ve all had the hit of pleasure after an installment ends on some particularly insane cliff-hanger and we remember that we can watch the next episode right now. It’s a relatively recent addition to the pantheon of slightly illicit yet mostly harmless adult pleasures, residing next to eating ice cream for dinner, drinking a beer with lunch, and having sex with someone you probably shouldn’t.

Yep. Also interesting:

Yet traditional television networks still apportion their series in weekly episodes over four to eight months, allowing binge-­watching only in retrospect, even though, for an increasing number of viewers, binge-­watching isn’t just a way to catch up on a season that has already wrapped but a better viewing experience altogether. Why let networks and advertisers get in the way of that? Which may explain what Sarandos says, that the audience for Breaking Bad is bigger on Net­flix than it is on AMC. (One of the few hard numbers Net­flix has shared is that 50,000 of its subscribers watched all 13 episodes of Breaking Bad’s season four the day before the new season premiered on AMC.)

The audience for Breaking Bad is bigger on Netflix than it is on AMC. Think about that for a second.

Anthony Ha for TechCrunch:

Yet when I watched House of Cards, I really enjoyed the space between the episodes, when I could wonder about what happens next and anticipate the next time I’d have an hour or two to catch up. That’s not a new idea — in fact, it’s one of the main pleasures of television. But I think it’s something people lose sight of when they talk about bold new distribution models.

I agree, this topic is being lost in the larger debate. I believe I prefer the House of Cards model for the same reason I’ve long preferred watching shows on DVD rather than when they air — I like to binge.

But I do miss some of the “watercooler” effect of everyone talking about what just happened on Lost this week — something which the very existence of Twitter has essentially perfected. There’s still definitely a watercooler effect with House of Cards but it’s more about the show in general rather than specific plot points since we’re all likely at different parts of the show right now (unless we’re doing with season 1 already, of course).

Andrew Wallenstein of Variety reports on a panel featuring CAA TV literary agent Peter Micelli, who spoke about Netflix:

“The cheapest show is $3.8 million an episode,” Micelli told a crowd of more than 500 lawyers in the entertainment business. “‘House of Cards’ started at $4.5 million and (executive producer David) Fincher took it way above that.”

It ain’t cheap, but with Microsoft, Amazon, Redbox, Verizon, and others now getting into this game, there’s little question in my mind that this will be the future of television.