Sony Pictures Television produced Breaking Bad[1], and Mad Men was produced by Lionsgate Television [2](who also produced Orange is the New Black). Netflix doesn't need to buy AMC, they just need to outbid other companies when buying content. Which is exactly what they did for House of Cards, they beat AMC and HBO for the rights[3].
Former Netflix employee here--left in August (not super-relevant; but, disclosure, etc.)
Thanks for posting the details here. It's pretty clear that the OP doesn't really have a strong understanding of the mechanics of the TV business. There's simply no value to owning AMC. They could spend billions for AMC or millions for future shows themselves; Netflix is smart enough to see the real value is in the latter.
Moreover, Netflix has absolutely no interest in getting into the "linear TV" business. It doesn't fit well at all with where they are going.
EDIT: The partnership, as it exists today, is hugely beneficial for both companies. AMC gets promotion for new seasons and Netflix gets a huge rush of people watching previous seasons as they become available. There's zero value to either of them in one owning the other.
It's pretty clear that the OP doesn't really have a strong understanding of the mechanics of the TV business.
For anyone who is interested in learning more about the mechanics of the TV business, I strongly recommend the book "Difficult Men" by Brett Martin. It's nominally about shows like the Sopranos and their creators, but there is a lot about the industry that is "quality television".
+1 for Difficult Men. Very in-depth and well written.
A head's up though: even though it was published recently, it was written just before the ascendancy of good internet TV (House Of Cards and Seinfeld's web series were nominated for Emmy's only just this year) so it mainly chronicles the rise of HBO and then Showtime, AMC, etc from a decade ago. However the parallels between premium cable and the internet are pretty clear.
Yes. House of Cards is as important as anything that has happened in mainstream television in the last few years. Maybe the author will include an afterward in future editions?
According to Kevin Spacey, Netflix was the only buyer that didn't want "House of Cards" to do a pilot, which, when you think of it, would have been an immense waste of time, talent and money.
Although it's more expensive to do a separate pilot, it's not always a waste of time or money. In many cases, ideas that on paper are very good don't translate well. A pilot lets you catch these problems and remedy them. If you go straight to series you may end up only finding out about these issues when it's too late to fix them.
A few good examples of this: the (unaired) pilot for BBC's Sherlock is a not fantastic 60 minutes with significant pacing problems, which was subsequently reshot and turned into a well received 90 minute miniseries. The US version of Life on Mars got completed re-located and re-cast as the pilot was just bad (...most people wouldn't call what ended up as 'good', but it was a vast improvement on the pilot).
Neither approach is without its problems. Take a show like Game of Thrones, which is very expensive to make. On the one hand, HBO could have saved millions of dollars by not ordering a pilot. On the other, it was pretty clear once it came back from post production that the approach the writers had originally taken wasn't going to work, and a number of changes were made to make the show more accessible to people who hadn't read the books.
So HBO did 'waste' several million dollars on a pilot that never aired, but the ability for the creative team to review the pilot before embarking on a full series commitment meant many changes could be made that resulted in a better show. HBO have easily recouped the lost money.
It's interesting that Amazon have taken the opposite approach to Netflix, and ordered a large number of pilots rather than going straight into series commitments.
For House of Cards, where known commodities like Kevin Spacey and David Fincher were already attached to a known story (House of Cards is a remake of a British series from the late 80s) it probably doesn't make sense to do a pilot.
It'll be interesting to see how it plays out. None of the Netflix originals so far has done a traditional "pilot" approach and, while I was there at least, there was no desire to start taking that approach.
The Netflix model is really completely different than traditional TV. Take Hemlock Grove as an example. Critically panned and considered by most people in HN circles to be a "bad" show--but (without going into detail) I can absolutely say it has been VERY successful for Netflix.
I have heard this before, and just to inject my own experience while I like House of Cards it took me awhile to get through it. Hemlock Grove though I went on a complete binge, every episode that ended I wanted to watch the next one.
The thing I've heard most often about Hemlock Grove sounds something like this, "It's really, REALLY bad! Oh man, it was so terrible! I watched the whole thing in like 2 days and it sucked! I can't wait for Season 2--it's gonna be terrible!"
I found Hemlock Grove interesting, the story progressed really slowly, luckily Netflix allows all-you-can-eat watching so I end up watching the whole season in a couple of weeks - where if I had to wait a week in between episodes I likely wouldn't have bothered. Overall I thought the production quality was high with good actors/acting and I liked that it had an unusual story-line even though I don't really like that genre. Will definitely watch next season, tho there are also better things on Netflix.
> the (unaired) pilot for BBC's Sherlock is a not fantastic 60 minutes with significant pacing problems, which was subsequently reshot and turned into a well received 90 minute miniseries
Oh, that's what it was then. I downloaded the first series of Sherlock and was surprised to see the same first story twice.
But I thought the first version was vastly superior to the second one; it had much less money, which, in my opinion, allowed it to be more intense and more "real".
Whatever you think, it's most interesting to watch both!
Why not use pilots like kickstarters? Produce a bunch of promising pilots, have consumers "vote" or even "fund" what pilots they want to see made into TV series?
Unfortunately their content is pretty cruddy. I watched the Zombieland pilot and one other and they were both borderline unwatchable. Bad acting / writing / production, etc.
According to Kevin Spacey, Netflix was the only buyer that didn't want "House of Cards" to do a pilot, which, when you think of it, would have been an immense waste of time, talent and money.
I agree with most of Kevin's Spacey's comments but this one was a huge gamble for Netflix. I think pilots in the digital realm will be the media version of an MVP and seed financing before an A round.
Also define "immense" waste, a Pilot is an episode you're making anyway. There's some added expense from ramping production up and down temporarily but its no where near as bad as making 13 episodes where the last 7 or 8 aren't useable.
The IT Crowd is a successful show in the UK but the pilot for the US version was garbage, ruining almost every joke from the original. Even though having a successful predecessor helps a show somewhat, there is still a lot of room for error.
Except "House of Cards" was a political soaper (west wing) with a charismatic anti-hero (the shield, etc.)
"The IT crowd" as a goofy farce had no American counterpart and was pretty much doomed to failure. Better translation examples would be the American "The Office" (based on other office-based comedies) and the American "Coupling" (a "Friends" clone.) "Coupling" failed because the first American episode was nearly a shot-for-shot remake. You might have been able to get away with that in the 90s, but not in the Netflix/Bittorrent era.
Actually, the bigger reason (as I understand it) that Coupling failed in the US had more to do with American network TV not being at all comfortable with the content of Coupling. The humor was generally "neutered" for American TV and the resulting product was so watered down it was doomed to fail.
I was going to disagree because some U.S. remakes of British shows have not been as good or have been terrible, but in-general tried and true products in a market in one country have a better chance of succeeding in another country in similar form. This generalization pretty much carries over into most products and services.
Something else that would be interesting would be to show the # record/CD/mp3 sales of cover songs of successful original vs. originals by the same band doing the cover.
How is a pilot a waste of time, talent, and money? Pilots are basically the MVPs of TV shows. In many cases it's less wasteful to develop and test a pilot than to develop an entire season of a show, only to have it fail. (Of course, even pilots are imperfect indicators of a show's potential for success, but now we're diving into a deeper rabbit hole and a digression).
Nobody's claiming pilots are cheap, efficient, or anything of the sort. But they do serve a purpose. In the TV development business, it's better to know if a $1M pilot is going to bomb than a $10M+ season is going to bomb.
Netflix is in a unique position to change the way development is traditionally done, however, and over time, if they're successful, they may start to eliminate the need for traditional pilots -- or at least figure out how to make the pilot a more truly MVP, i.e., a lot quicker and less costly. But for the time being, they're paying above-market rates for development and production, and if anything, they're taking bigger risks on production and development than networks do.
It's all part of a gameplan, and I respect that. They're buying a lot of short-term risk in hope of nailing a sustainable, scalable, long-term model for original content. It's basically what HBO had to do back in the day, and what AMC had to do to become what it is today. This is why Netflix doesn't need to buy AMC; Netflix needs to replicate AMC (sort of), and eventually replace AMC (among others).
Pilots warp the content, you've got one shot to win or lose it all so there can't be any spacing. Works great for some stories, doesn't work for some others. By the same logic, you shouldn't start a company because 90% will fail, you should start 10 or 15 to try and have a winner or two in your portfolio, right? When your the guy running one of those, don't you want to give it your best and learn from mistakes and not assume that failure rate?
If Netflix can assess the content pre-pilot and then give the creators the money and space to tell their story, they don't need AMC or any of the old media, the creators will come to them. They're now selling DVDs of some of their content, they could potentially even syndicate it back... They have a lot of tools, they just need stories.
"By the same logic, you shouldn't start a company because 90% will fail, you should start 10 or 15 to try and have a winner or two in your portfolio, right?"
That's not at all the logic I was following, but interestingly enough, that's basically the VC portfolio strategy: counting on 1 company to earn 100x all the others combined. Spreading out the investment such that any one, or two, or ten can afford to fail so long as one wins big. Remarkably similar economics, in fact. It's how the TV networks have operated for so long. Networks aren't like founders; they're like VCs. The series creators are like the founders (sort of), the studios are like angel investors or accelerators, and the networks are like VCs.
But that's beside the point. My logic is that a pilot is a lower-cost proof of concept of a series (and even a pilot is extremely expensive and often wasteful). If anything, production companies and studios (not networks) should be making them, and should be finding faster, cheaper, and more minimal ways to do so -- eventually rendering the necessity for a full-fledged pilot obsolete. There is no reason why Lean series development and product/market testing can't happen, especially if a company like Netflix is the buyer.
To a certain extent, this is actually starting to happen. A lot of studios (again, not networks; let's be clear about that distinction) are pre-marketing and pre-releasing proof of concept videos and other materials before pitching them to networks and going down the tradition pilot path.
"If Netflix can assess the content pre-pilot and then give the creators the money and space to tell their story, they don't need AMC or any of the old media, the creators will come to them."
I never said Netflix needs AMC; in fact, I recall saying the exact opposite. Currently, FYI, Netflix is playing the "old media" game in going to, paying for (at a premium), and developing with the "content" marketplace in Hollywood. I don't think enough people quite grok that. As I said, this seems like a necessary step until such time as Netflix commands enough respect and power within that market to rewrite the rules and change the economics of distribution.
A pilot for a series with Kevin Spacey and David Fincher attached is a waste of time, talent and money. They are known quantities with proven track records.
You either give them the money to produce the series or you don't.
In this talk http://www.youtube.com/watch?v=P0ukYf_xvgc he explains the series itself doesn't work well in a pilot: He wanted long story lines, and multiple complex characters, both of which are impossible in a pilot.
Most posts about the future of the "Golden Age" of TV indicate that AMC is about to drop off the scene entirely. Breaking Bad and Mad Men are titans but they are on their last legs, Walking Dead has been getting worse and worse. The new goldenboy on the scene is FX but it seems like they have their own plans (they recently segmented into two channels, one for comedy and one for drama).
I am not sure what Netflix gains content wise from buying AMC - they already have rights to Breaking Bad and Mad Men. Orange is the New Black and House of Cards both seem to be better received than any of AMC's new programming (Low Winter Sun is getting skewered by blogs/critics).
I agree that Amazon and Netflix are in the midst of the original content battle. Netflix is taking the analytical approach, whereas Amazon Studios seems to be scaling the typical production process to the web (scripts -> pilot -> pickups).
In the end, I think AMC needs Netflix more than Netflix needs AMC, so I don't see this kind of acquistion happening. But still a fun article to think about. Thanks for posting!
When you say Walking Dead has been getting "worse and worse" are you referring to the show itself or the ratings? While the show itself is debatable, the ratings are not suffering in the least.
I was speaking in terms of quality. I think both can fuel subscriptions/customer acquistion. Quality leads to "omg you have to watch this show it is soooo good" and ratings lead to "everyone I know is watching this, I should give it a try"
I think you're really overstating the case for Walking Dead being bad, here. Everyone I know watches it, it's a huge hit. I would agree that it isn't as good as the first season, but it's still better than most shows. I'll be watching when it come back.
This is all completely anecdotal but the general consensus of the many people I know who watch it is that season 3 was mostly terrible, and allowing the Governor to survive the finale was a huge mistake (because the dragging out of that story, which has long ago worn out its welcome in the tv version of it, is a bad idea).
Having said all of that, of the people I know who really follow the show on the creative/biz side are happy that the former show-runner was canned and replaced with Scott Gimple who wrote a lot of the best episodes.
Personally I'm taking a wait and see approach with the next season. If things aren't solidly turned around by the middle of the next season, I'm going to quit watching. I don't want to make the same mistake I did with Lost where I was so convinced they would fix the problems that presented themselves in later seasons that I stuck with it to the bitter end.
I agree, but I would agreed with you at the end of Season 1.
The whole show one bad cry away from being a zombie chick flick. The writing and scenes are just bad, unrealistic(if that quality means anything here, which I feel it does) and just so stupidly emotional.
Ugh, don't people want anything makes them think anymore, this whole mass market shit is catered for those with not so much critical thinking ability. Maybe I'm lacking some emotional intelligence, but wasting my attention on petty and shallow relationships and trying to delay the plot from continuing was acceptable during the Dragonball Z days but not now.
Take an amazing show like Burn Notice and apply that methodology to creating action, drama or what have you. If you look at the plot over the 8 seasons, you will notice for sure that the story cannot really top the first few seasons, but it doesn't matter. The execution of the show is what really matters, and a certain level sophistication, acting and chemistry is important.
These shows lack any direction or purpose and that's important.
I just finished watching my DVR'd copies last week. It would have been a spoiler for me. Nowadays you can't expect for people to watch something even within the few weeks surrounding the original airing. I'm sure that makes it hell for ratings companies.
It would have been nice for a little * spoiler alert *.
No worries - it's not that big of a deal. But I think you're right that leaving that character alive at the end of the finale seems messy. I assume that they'll keep playing out the Governor as an enemy for a while. Or maybe he'll just come back in after a season or two hiatus... hopefully that.
I'll still be coming back, but I agree with OP. I think Frank Darabont leaving has led to a dip in quality. Many people complained the pace was too slow in season 2, but it what that "slow pace" that really helped deepened the character development, and emotional impact of certain scenes.
Your points are valid, but the deal might make sense just for the syndication rights to Breaking Bad and Mad Men in the future, possibly as exclusives.
AMC, Netflix, etc. are just licensees of the content. It is just like being the first one to buy a copy of Photoshop, you don't have any influence or financial interests over future sales.
For the rights you describe, Netflix would need to figure out how to buy Sony.
I see. That's an interesting distinction. Presumably AMC exercised some sort of exclusive rights to Breaking Bad? Does that mean that the fact that Netflix has Breaking Bad right now has nothing to do with AMC?
There is a whole web of rights when it comes to media distribution. AMC has the linear rights for Breaking Bad but not the digital distribution rights. Meaning, when you buy Breaking Bad on iTunes the money does not go to AMC. Netflix's Breaking Bad deal benefits AMC in that people can catch up with the show and then watch it on AMC but AMC didn't sell those rights to Netflix, Sony did.
I work in the industry and am happy to answer questions.
The author doesn't seem to understand how the television industry works, which is okay because it's kind of a cesspool but as a result the article loses a lot of its force (and this is as someone who's a hopeless AMC devotee and Netflix addict!)
AMC is perhaps most critically recognized for Breaking Bad and Mad Men, but they picked up those shows the same way anyone else can (including Netflix) -- by outbidding everyone else for them.
Netflix doesn't need help getting critically/publically lauded programming -- Orange is the New Black was a critical hit, and House of Cards was also well received. Their opportunities for growth lie in the people who don't really care about 'critical TV': the vast majority of consumers who have basic cable, are satisfied by basic cable, and don't pay attention to streaming services because the value proposition isn't attractive enough.
Put another way -- what if Netflix got into sports broadcasting?
That's exactly what I was thinking; to start, though, what about entering into the university sports broadcasting field?
If you broadcast every university sport, you'll get a large number of family, friends and fans of specific teams that are under-served with existing content. It's not worth the cost of creating a new channel for each, but it might be doable online.
Interestingly enough, ESPN has been getting into trouble for "hoarding" such content as they own so much of it in big contracts they can't air all of it, but it boxes out others from showing it.
Walking dead seems to be tapering off fans, turning from less of a zombie show to more of a drama ( each episode is 95% talk, 5% zombies ).
The fact is, both breaking bad and mad men would make the price of AMC unrealistically high. If Netflix did want to buy them, they should wait until the season after when both shows are no longer on and get it for a song.
A much more astute purchase would be HBO/Cinemax/Shotime
> Walking dead seems to be tapering off fans, turning from less of a zombie show to more of a drama ( each episode is 95% talk, 5% zombies ).
I'm sorry to derail, but I am so sick of this being considered as a "problem" with the show. The show is about human beings facing their inevitable demise. Even the title "The Walking Dead" is a play on words, referring to the survivors, rather than the zombies themselves. The show, the novel are both dramas first, and zombie stories second, where the zombie story is simply a backdrop to the very human drama of coping with one's own death and the death of loved ones.
The show has gotten worse, but that's because the characters have gotten more bland and the scenarios have gotten more tepid. It has nothing to do with drama:zombie ratio. Would you criticize Breaking Bad because you don't see as much crack being made in more recent episodes? How fucking stupid.
If this is a major problem to you, then you don't get the show and probably shouldn't be watching it anyway. I'm sure Fox will cook up some nice, bland, predictable zombie-loaded crapfest for you in due time.
Would you criticize Breaking Bad because you don't see as much crack being made in more recent episodes? How fucking stupid.
It's not stupid at all. The meth on Breaking Bad is not the plot, the plot is cancer-stricken man is pulled into the seedy world of illegal drugs and how he participates. The plot of Walking Dead is survival in a zombie world. If you aren't going to focus on conflicts with zombies then they should've just set it in a post-apocalyptic world sans zombies.
Zombie movies / shows are never about the zombies. They are about how the survivors navigate that world. They almost always play with the humanity aspects of it all. What does it take to be truly human? What happens when the zombies aren't the only bad guys? Etc... Most classic horror stories play with the line between human and monsters, and that is why the genre has survived as long as it has [ * ].
If you read the comics you will know that The Walking Dead is much more about the surviving humans, their interactions, and a discourse about society than it is about zombies.
It's so much about what they currently have as that they have shown for a channel, with what is presumably a much smaller budget that the big three premium channels you mention to turn out hits.
I personally think the author is onto something here, as AMC obviously knows how to do production at a high level, and the point is they need volume of shows as well.
From my limited understanding of the industry AMC doesn't actually make the content, they just buy it.
Having finished Orange is the New Black I think Netflix has the right people to make decent decisions as to what to buy. It would seem to me to make more sense to invest directly in the content rather than buying a purchasing team.
Why buy AMC? Netflix can just bid on the shows themselves, and have them directly. Or is AMC itself actually making the shows? My understanding is that there are show companies that make them, but they pitch the show to networks until they get funding (or maybe even create a bidding war for hot properties in the business).
Netflix and AMC have very different business models, and Netflix' business would cannibalize AMC's.
AMC makes a small amount of premium content on a continuous basis, and forces cable companies to carry a mixture of paid channels and advertising. AMC is also vastly more profitable, both in terms of P/E ratio (18 vs 300) and gross earnings (200MM vs 40MM), so it's not as if their "legacy" model is hurting them.
Netflix makes a small amount of premium content and sells itself as an alternative to cable, undercutting the traditional AMC model. Their core goal in making content is just to have a library they don't have to license from outside. It doesn't have to be current or ongoing, just big.
It's true that both of them rely on premium content as a loss leader but they have very different ways of earning money and capturing an audience. It would be hard to reconcile one with the other.
First, a lower P/E also says the market has lower expectations about future profitability. It doesn't make a whole lot of sense to compare the profits of a company extracting profits from an existing cash cow to those of a company in the middle of a market share race. I think AMCX's P/E tells the opposite of the story you're trying to tell.
Second, AMC doesn't make any content. They fund it via production companies, just like Netflix.
Third, I don't understand your point about "forcing cable companies to carry a mixture". Cable companies pay AMCX for the right to carry AMC channels (AMC, Sundance, IFC, &c); that's a little more than half AMC's revenue. The other half of AMC's revenue comes from the ad inventory AMC sells on its channel.
These are probably nits, because ultimately your point about incompatible business models is correct.
Cable companies pay for AMC. They are compelled to take IFC and the others as a condition of showing AMC.
This is how AMCX, the firm, maintains its ad inventory. It doesn't matter if the content on AMC can't pay for itself as long as the suite of channels in combination can.
The trio of the shows: Breaking Bad, Mad Men, and The Walking Dead — are either on their finishing acts, or too close to finish. This time next year, two of their three flagship shows will be over.
Netflix has a good strategy in their hands. They need to focus on leadership, creative, and funding daring projects.
Side note: Consider this, Netflix already has three hit shows — House of Cards, Orange is the New Black, and Arrested Development.
But the thing is AMC doesn't make content, producers do. And they go wherever the money is. They own some hot properties now but look at any premium channel and you'll see a history of great shows that have eventually gone away. In fact they could just as easily buy HBO or Showtime and get the same effect, good existing properties but also a network of existing users that are willing to pay for content.
This overlooks the reason why AMC has a deal with Netflix. They're in it to promote the current season of their shows. By having older seasons of Breaking Bad, TWD, etc... they can easily pick up new viewers of their new ones.
Uh, Netflix has a killer edge within their industry that every other company in the world wishes they had in their own. They should keep doing exactly what the fuck they're doing, and not listen to what anybody else thinks. The peanut gallery has been wrong about them every inch of the way.
But seriously, why on earth would you adopt your losing competitors' business model when you're the new hotness?
Doesn't make sense. Why would they buy it for $4.5 billion or more when they have no interest in positioning on cable tv? What they want is content, they can simply bid for it. If they want their management, the people who select shows to produce, they can simply pluck those people away.
The author forgets to mention that buying AMC might be interpreted as declaring war on other content producers. Sure Netflix has dabbled a bit in funding productions, but starting to slice into another pie will just make their core business model more difficult to maintain if misinterpreted.
This is probably not a big concern anymore. Almost all the major studios are in bed with a distributor of some kind. HBO & Time Warner, NBC/Universal and Comcast, and so on. Disney is the only one I can think of without some cable arm attached, maybe Viacom? Fox has/had Sky internationally and used to own a piece of DirecTV, IIRC.
Thus, Netflix wouldn't be an outlier, but part of a broad change/consolidation happening to the industry.
I think this idea the "Why X should/needs to buy Y" is getting tiresome. No one should/needs to buy anyone else IMHO. I think partnerships are almost always in theirs and ours best interest.
Why buy AMC when they can just hire the executives who made the calls on those shows? With a market cap of about $4b, AMC is pretty damn huge. Sure the content would be included but still hard to justify.
> While its an unscientific poll, I have found it hard to find anyone I know that watches television who doesn’t love at least one of their hits: Breaking Bad, Walking Dead, and Mad Men.
One of those shows has only a few episodes left, while another has one season remaining.
Also, AMC doesn't produce Mad Men or Breaking Bad.
The negotiations for the most recent seasons of Breaking Bad and Mad Men were not because AMC is in financial trouble but rather because they were trying to be ruthless with not having to pay more money to the creators who know that they have the best shows in TV, and that AMC really wanted them.
AMC's biggest shows are about to end and they can't seem to create another hit. Also, as others here have pointed out, AMC doesn't actually make those shows.
literally every single comment here that talks about the quality of AMC shows is utterly irrelevant to this topic. AMC doesn't OWN any of these shows, they currently own the CABLE RIGHTS to those shows.
buying AMC is just buying a cable channel and those rights.
NOT a good move for netflix. they could simply start outbidding AMC/others for quality shows. oh wait, thats exactly what they've been doing....
That post makes no sense. The great that Netflix is available on every platform known to man is exactly why they are one of the dominant players in online video streaming. What possible benefit is there to Netflix for all the expense and hassle required to release a Netflix-branded device, when all they have to do is port an app, and let someone else take all the risk?
[1]http://en.wikipedia.org/wiki/Sony_Pictures_Television#Shows_...
[2] http://en.wikipedia.org/wiki/Lionsgate_Television#Production...
[3] http://en.wikipedia.org/wiki/House_of_Cards_%28U.S._TV_serie...