Afternoon fellow “Collapsers”:

Today’s tale of mutation takes the form of a PARADOX…

NETFLIX’s Q1 earnings sent ripples of enthusiasm comparable only to the famous Chris Matthews “thrill up his leg” of 2008 through the markets on Wednesday. Good for Netflix right? Well it’s a little more complicated than that:

NETFLIX is actually not a particularly (if at all) profitable company. What it is good at is getting INVESTORS to keep coughing up more money and overvaulting the metrics for that VERY SAME REASON (and I’ll proffer a suggestion as to why I think people do keep coughing up more money shortly).

But why do I think the Q1 earnings create a bit of a mirage: It’s getting more EXPENSIVE to license CONTENT, and NETFLIX is already being squeezed hard by the deals it made with DISNEY and EPIX (Paramount, Lionsgate, and MGM). Additionally, and partially to combat this, NETFLIX is producing original content as well, and that’s expensive as hell too. The first 2 seasons of “HOUSE OF CARDS” alone cost them $100 million. They are correct though: LICENSING will only get you so far; you do have to produce original content.

However, this is where the NETFLIX model hits a snag — NETFLIX doesn’t run any ADS. It isn’t tethered (which helps defray costs) to a big media conglomerate (like HBO to it’s parent company TIME-WARNER). NETFLIX needs SUBSCRIBERS to pay for all this expenditure, and most of them are coming now from OVERSEAS. Is that enough to keep things afloat? I don’t know.

There are digital issues that come with branching into certain countries where the INTERNET is under state-control, and also into countries where the SMART-PHONE is people’s only digital life-line. Does Netflix work great on a SMART-PHONE? Not sure. But I know what does: FACEBOOK. And they’re already starting to experiment with VIDEO CONTENT (they teamed up with Verizon to run NFL ADS). That could be a future problem for NETFLIX.

So why do I think WALL STREET keeps overvaulting what is likely either stagnation or incremental progress?

My guess is one thing, and one thing only: DATA. NETFLIX (like FACEBOOK) has gotten millions and millions of users to PUKE UP astronomical amounts of RAW DATA. If the company ever needs to be dismantled or absorbed who wouldn’t KILL for all that DATA. And since we have such weak data protection laws — it’d be a literal FIRESALE.

But how does this tie into NARRATIVE ITSELF:

Because NETFLIX DEMOLISHED (with some help from Amazon, iTunes and Hulu), the LONG-FORM DRAMA that it hoped to stake it’s turn into ORIGINAL CONTENT on (House of Cards, Orange Is The New Black, Bloodline, etc…) to generate big gains. How did they destroy it?

BINGE-WATCHING. Although premium CABLE NETWORKS removed ADS from the SERIES PROPER, they still began and ended each episode with ADS for their own content, and kept the LONG-FORM structure they inherited from NETWORK TV in place, although they did usually SHORTEN THE INDIVIDUAL SEASONS (13 episodes as opposed to 23). But we really didn’t know what TV without advertising intrusion looked like until THE BINGE-WATCH on NETFLIX. Which means:

The long-form television model is obsolete without ADS to arbitrarily control NARRATIVE SEQUENCING. It’s dying. Not dead yet. But it’s coming. And two recent moves from NETFLIX and HBO are proof that they know it and are adjusting:

NETFLIX is producing DAREDEVIL (not a long-form drama I’d argue). And HBO just inaugurated HBO NOW, which will produce and/or stream content that could range from 8 minutes to 8 hours. Or as a friend of mine put it: “Sounds like Highbrow YouTube”.

As another friend and amazing novelist Alan Glynn pointed out (and I’m paraphrasing Alan): The basic structural template for all long-form TV DRAMA is the SOAP-OPERA. And he’s 100% right, and what do we know about SOAP OPERAS? Two things:

1.) The longer they go, the SOAPIER they get (and this infects even the best LONG-FORM DRAMA. I’d argue by SEASON FIVE, even the estimable MAD MEN had gotten a bit like a powdered old whore).

2.) The entire mission of LONG-FORM TV/SOAP OPERAS was to sell ADS. The FIVE-ACT STRUCTURE is a paradigm passed down SOLELY TO account for commercial breaks and MONETIZE them. And when you strip the ADS out, FIVE-ACT STRUCTURE feels like a pretty arbitrary way to compose.

So someone needs to euthanize TV LONG-FORM before it starts to look like it’s STAGE 4 cousin FILMIC NARRATIVE (and a slight detour into THIS: How has FILMIC NARRATIVE SURVIVED in the face of most people under 30 looking at it with the enthusiasm of a slow ride to grandma’s house? ANSWER. Theatrical films aren’t really made for the US AND CANADA anymore. And I’d argue that RUSSIA, CHINA, and BRAZIL, may not be so SICK to death of the three THREE-ACT PARADIGM yet.)

So minus the ADS, what stable form will post-long-form narrative settle on? it’s looking like 3 options right now (and the end result could be a mix of all three):

THE SERIAL FORM: A sort of hybrid between the comic book and the tabloid, where a single ARC (either narrative or character based) is pursued from beginning to end over a FIXED PERIOD OF TIME. This is where the explosion of COMIC BOOK SHOWS is emanating from. The GRAPHIC NOVEL/COMIC BOOK is the SERIAL form PAR EXCELLENCE.

THE ANTHOLOGY: Examples here are “American Horror Story” and “True Detective”. Wherein you keep either the CAST or the GENRE or explore BACKSTORY (FX’S season-two of FARGO), but change the NARRATIVE every season. And:

THE EPIC MINISERIES: Not many recent examples here, but you’re going to see more. The Weinstein company just inked a deal for Capote’s “In Cold Blood” and I’d argue — even though it’s non-fiction narrative — that “The Jinx” on HBO was an event mini-series too.

But even beyond the removal of the AD-BASED STRUCTURE, the BINGE-WATCH destroyed perhaps the greatest HOLD NETWORKS had over us, and it ties into something BRET EASTON ELLIS correctly diagnosed, while discussing the death of the theatrical film experience (via Amazon, iTunes, TCM, etc…) on his PODCAST:

The viewer IS IN CHARGE for the first time. When you DOWNLOAD something, STREAM it, BINGE it — the VIEWER sets the parameters for the INTAKE. It can be fifteen minutes or twelve hours. And this is a historical precedent that has removed the ARTIFICIAL BOUNDARIES jammed into PLACE by MOVIE THEATERS and TV ADVERTISING, and the form has to ADJUST TO IT.

Ironically, the original cash cow (ORIGINAL LONG-FORM CONTENT) that NETFLIX was counting on (and that they clearly are abandoning via DAREDEVIL), is the VERY SAME ONE they helped DESTROY.

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