House Of Cards  is the most interesting show of the year. But it’s not revolutionary.

Let’s break it down.

1. Exploding Commercial TV?

House of Cards and Netflix have not exploded the restrictions of commercial TV (show length, plot resolution) that endured for decades.

The Sopranos and HBO did that.

Pre-Sopranos, a show’s hero leaving his daughter’s college interview – to murder a long-lost colleague – was unthinkable. In retrospect, it kicked off the golden age of television.

2. Redefining TV Narrative?

House of Cards does not smash the self-contained, enter-anywhere model that reigned from the beginning of TV.  24 and Lost did that.  Those shows were less erudite than House of Cards – but their DVR-era serialism was a major breakthrough.

Before then, you could enter a TV series at any episode. Afterwards, you had to watch from the beginning.

3. Big Data-Driven TV?

A recent NYT piece claims that Netflix redefined TV by using viewer analytics – certainly a key to the future of media – to  ensure that HOC would be a hit.  Really? Does it really require Netflix’s superb and proprietary data mining environment to know that David Fincher + Kevin Spacey + a UK hit remake + $100 million = media buzz?

No. Of course not. There was no secret sauce required to know people would watch. And assessing economic value via viewership numbers would require reviewing viewership data – which Netflix keeps private.

The Times can do better.

4. Invention of Binge Viewing?

When I dispute HOC’s inclusion in the Sopranos/Lost pantheon, I get one primary counter-argument: binge-watching. Due to the way Netflix works,  HOC is the first show designed to be consumed as fast as viewers can handle it. In fact, the Netflix UI gives the viewer a mere 15 seconds from the end of an episode before it launches the following one.  Which, frankly, is awesome.

But it’s not new.

In fact, the real giant of Netflix binge-watching comes from a cable network. It’s a show with the least likely high concept in history: “high school chemistry teacher gets cancer, cooks meth”.

AMC’s towering creative achievement, Breaking Bad, has spawned year after year of true breakthrough viewing patterns – see here and here, for example. From Gus Fring to   Hank on the toilet, Breaking Bad (and its labelmate Mad Men) have completely remade the narrative arc of what TV means in our lives and times.

5. Netflix Kills Cable TV?

The news blitz is not about House of Cards anyway, not really.  It’s the return of an existing  presumption: that we are witnessing Netflix’s potential to conquer cable.

That will not happen.  As I’ve written before, this is a sexy thought – but its not based in reality. In the economics of media, Netflix is a buyer– that is, they rely on the major studios to license them content. Without big studios, Netflix’s offering to the public dries up – fast.

And the dirty public secret is that – far and away – the major revenue drivers in Hollywood are cable channels.  These are the networks that some hope Netflix can defeat.  But that’s the modern day equivalent of Orboros, the snake that eats its own tail:  no studio is going to spite its master to benefit Netflix.

To underline this, see the graphic above.  I use it in my USC course – it lists the content controlled by three parties: 1. Comcast/NBCU; 2. the three owners of Hulu; and 3. Netflix.

The dificulties of the Netflix-as-cable-killer argument were underscored today – when CEO Reed Hastings announced that Arrested Development would run for only one season.

The truth: Netflix is a great service playing a difficult game.

6. Making a Great Show is Enough. Really.

The reasons HOC is great are the conventional ones: stellar performances, exemplary writing and directorial prowess.  The talents of Spacey, Wright, Fincher & Co exhibit an extraordinary degree of nuance, intelligence and grace… In other words, it’s an outstanding TV show. Not a new kind of TV show.  It’s a great effort from a new “network” that continues to innovate, and to contribute disportionate value… much more value, dollar for dollar, than satellite or cable.

House Of Cards is a great looking and well-produced show. It’s a fine contribution to the television landscape.

Not a game-changing one.

– William Penn

Rest easy brother – see you later.

“I’m going to destroy Android, because it’s a stolen product. … I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion… to right this wrong.”
– Steve Jobs

I don’t know if Aaron Sorkin was listening, but the coda of the Steve Jobs story may have been written in San Jose this week.

While Jobs was alive, his MacWorld keynote was timed to steal the thunder from the Consumer Electronics Show, the industry’s largest trade show and Vegas’ biggest event of the year.

The most notable event at CES this past January,  to me, was the juxtaposition of three iconic national brands: Sony of Japan as Christmas Past, Apple of the US (Christmas Present) and Samsung of South Korea,  (vying hard for Christmases Future.

Sony, the former king of digital, had Earth Wind & Fire playing live at their booth… perhaps to disguise little else worth seeing.

Apple doesn’t even show up at CES.

Samsung, on the other hand, had a massive booth full of new blooms, cell phones in a ton of models across the spectrum of carriers. Most notable was the Samsung Note, a device sized between a smartphone and a tablet. And well before the advent of an iPad Mini (widely expected to be announced this October).

The overwhelming feeling you came away with was that Samsung had taken their leadership beyond displays and solidly into mobile.  It was easy for an iPhone user to leave Vegas rationalizing the idea of a second phone.

Not so fast.

The notion that Samsung was getting awfully close to the look and feel of iPhone eventually led to what’s widely regarded as the most interesting IP trial of the decade.

Samsung is by far the most successful producer of Android phones.  Apple has argued that a number of features on Samsung devices –such as the “bounce” at the bottom of a scrolling list, the “pinch” feature, and the nature of the app icons themselves – not only echo those introduced by iPhone, but constitute theft.

Apple asserted at least eight Samsung phones, including the Galaxy S II and Verizon’s Droid Charge, are based on stolen IP and should be removed from the market. Other potentially impacted devices are listed here.

A series of suits and countersuits between Apple and its sometime supplier/biggest competitor resulted.  This week, those proceedings concluded with a knockout.

Apple won on 6 of 7 patent issues, and was awarded $1.051 billion by the jury. What’s more, the jury decided that many of the infringements were deliberate.  The language and tone of Samsung executives was viewed as, if not downright oily, at least disingenuous. Which, according to the foreman of the jury,  is why they delivered unto Apple over $1 billion  after less than three days of deliberation.

Why does this matter? For one thing, Android is not going away: IDC pegs Android/Google at 105 million units and 68.1% market share, up from 47% a year ago. It puts iOS at 26 million units, 16.9 percent share – down from 18.8%.  The Court’s findings, powered by current and future injunctions, are likely to force Apple’s competitors to move away from Apple motifs and into new areas of interface and utility. Which is ultimately good for users.

The world will continue to change, and Apple’s consumer experience leadership may eventually ebb.  But it hasn’t yet, and the founder of America’s most valuable company seems to have been vindicated one more time.

The following article originally appeared in PBS Media Shift.

It’s become popular to declare the imminent demise of pay television. Whether at the hands of Google/YouTube, or as a product of cord-cutting, there’s usually a sense of righteous indignation embedded in the arguments, something like: Cable and satellite companies have been ripping off consumers for decades … and now their days are numbered.

Founded in 2007, Hulu has done a superior job, creating a great user experience for online TV. Unlike most big media-funded video sites, Hulu’s interface is clean and modern. Unlike Netflix, its TV offering is fresh and current.  Its ad products have been increasingly forward-thinking, and have penetrated the majority of major American brands.

Creating revenue in online content isn’t easy for anyone. It’s especially trying when your business may threaten the companies that own you. Hulu’s team has built a business while walking a tightrope… maintaining a free high-quality service while keeping the fears of its media owners (News Corp/FOX, Comcast/NBCU and later Disney/ABC) in check. The departure of both the CEOs (Chernin at FOX and Zucker at NBC) who approved Hulu in the first place, and the acquisition of NBCU by Comcast, added to the challenges they surfed.

Hulu is a fascinating company. I’d argue that it’s the most interesting company to watch in Over the Top, largely because it’s such a different animal. Compared to Netflix,Google, Apple and Amazon:

1. Hulu is the only one not publicly traded
2. Hulu is the only one owned by Big Media
3. Hulu is the only one not routinely floated as the Second Coming

As there have been for Netlflix, there have been a rough days. One occurred when Viacom pulled The Daily Show and The Colbert Report from Hulu in March 2010. This was not a surprise, and had more to do with the economics of traditional distribution than with anything Hulu could have controlled for. I presented the details at SXSW that year (email me if you’re interested) and summarized the economic threat that cannibalization of these big Comedy Central shows could have posed during Viacom’s renegotiations with its MSO partners.

A second drama occurred at the resolution of the Viacom standoff, when CEO Jason Kilar issued a very public, Jerry Maguire-like manifesto on the appropriate future of the TV in Feb 2011.  It included several reasonable arguments from an unlikely source… such as “Traditional TV has too many ads”, which were well-received by the public, but not so much by the folks who owned the company.

While tensions may have flared, Hulu’s viewership has continued to grow steadily – a fact reflected by New Corp’s COO Chase Carey’s public statements, which have moved from skepticism about free models, to a recent assertion that Hulu’s value “dwarfed some of the values that were being put on it”.

Hulu itself primarily a free service.  But Hulu Plus, a $7.99 per month subscription service (a price comparable to Netflix), was announced in July 2010, opening the door to new subscription-based revenues on the types of devices which Netflix has dominated. According to another blog post by Kilar, Hulu Plus was on track reach one million paid subs in 20011, and “on pace to approach half a billion in 2011 revenue”.

Another major asset for Hulu, I’d argue, is a widely unrecognized reality of the media buisiness itself.  This is that the most profitable area of the media universe – by far – are cable television networks.

Why does that matter for Hulu and Netflix?

Here’s why.  Netflix reported 21.45M streaming subs and 13.9M DVD subs last quarter.But Netflix controls virtually no content; it licenses the vast majority of its shows from the Big Six media companies – who could one day take a page from the HBO/TimeWarner book and decide to boycott Netflix.

Contrast this with Comcast, who have around 21-22M TV subs (roughly the same number, give or take).  But they control NBC, CNBC, MSNBC, Bravo Networks, USA Networks, Syfy, Telemudo, NBC Europe, CNBC Europe, NBC Asia, CNBC Asia, E Entertainment, Style Network, G4, the Golf Channel, Versus… plus Universal Pictures and its motion picture distribution assets: Imagine, Illumination, Mandalay, etc… as well as over 14 million broadband subs.

Now consider Hulu. It’s owned by Comcast, Disney and News Corp (Comcast ceded NBCU’s voting rights as part of the acquisition but still has the equity) and Providence Equity. This means that Hulu’s owners control all of the content sources listed above… plus ESPN Networks, FOX Broadcasting, ABC, Pixar, Disney Pictures, Marvel, Touchstone., 20th Century, FOX Searchlight, FOX Sports, FOX News, the SKY assets, STAR in Asia, Disney Channel, A&E, History Channel, Lifetime etc.

Not a bad place to be in a content war.

The recent big news for Hulu was this summer’s announcement that it was for sale. Breathless reports handicapped leaked bids from Google, Yahoo, DIRECTV, DISH and others. The truth was that an acquisition never seemed particularly likely.  As I’ve said before, if Comcast, Disney and News can get $2B for Hulu, it’s a nice payday for a company that has run (compared to YouTube or Netflix) very modest expenses… and which is still almost completely dependent on the long-term rights granted by the very people selling the company.

Some smart people have been skeptical about Hulu. These include Barry Diller, who speculated FOX’s and Disney’s spawning of Hulu was the equivalent of “setting off a rocket and then running to where the rocket landed.” It’s a great image, but I disagree. In a landscape riddled with big media online plays that completely suck. Hulu is the lesding exception.  In spite of friction points, Hulu has built an admirable business and an attractive service.  And the economic variable we’ll never be able to compute for is how much bigger the pirate TV business would have grown, had the TV business not been willing to back at least one quality alternative.

Next time, we’ll begin to unpack  the 800 pound gorilla in the global video business: Google/YouTube.

As always, please send any questions to seth@newamsmedia.com.