Why the quants won’t take over Hollywood

By Felix Salmon
February 9, 2013

Andrew Leonard has a very odd column about Netflix and House of Cards, under the headline “How Netflix is turning viewers into puppets”. Netflix, you see, has lots of data, and it used that data in the commissioning process for the series:

Netflix’s data indicated that the same subscribers who loved the original BBC production also gobbled down movies starring Kevin Spacey or directed by David Fincher. Therefore, concluded Netflix executives, a remake of the BBC drama with Spacey and Fincher attached was a no-brainer, to the point that the company committed $100 million for two 13-episode seasons.

It should go without saying, of course, that dropping $100 million on a 26-episode remake of a great TV show is never a no-brainer. For one thing, for all that the original series is extremely good, it was also very timely, coming as it did at the end of Margaret Thatcher’s transformation of the Prime Minister’s office into something much more powerful and Presidential than the UK had ever seen. The BBC series tapped into Britain’s fear of the possible implications of that power, as well as the fact that Richard III and Macbeth are deeply rooted in the national psyche.

More generally, remakes are inherently dangerous things: what producers think of as a “proven formula” more often turns out to have been a unique and inimitable confluence of creative electricity. And it goes without saying that the better the original was, the less likely it is that the remake will surpass it.

But Leonard doesn’t see any of those risks, he just sees science, quoting a Netflix flack waxing implausibly about how the company is “able with a high degree of confidence to understand how big a likely audience is for a given show based on people’s viewing habits”. And then Leonard takes that PR fluff and turns it into a lesson about the fearsome implications of Big Data:

The companies that figure out how to generate intelligence from that data will know more about us than we know ourselves, and will be able to craft techniques that push us toward where they want us to go, rather than where we would go by ourselves if left to our own devices. I’m guessing this will be good for Netflix’s bottom line, but at what point do we go from being happy subscribers, to mindless puppets?

We’re never left to our own devices, of course: billions of dollars’ worth of marketing, programming, and other expenses are designed precisely to make us watch this rather than that. But at the same time, we humans somehow stubbornly refuse to become mindless puppets, and our tastes tend to evolve in wonderfully unpredictable ways.

One example of this is Netflix’s own first foray into production, Lilyhammer, which turned no one into puppets mainly because no one actually saw it. But the best example isn’t Netflix at all, but rather Relativity Media. If you think that Leonard is overly credulous about the power of Netflix’s Big Data, wait until you see Chris Jones, profiling Relativity’s Ryan Kavanaugh in 2009. He opens with Ron Howard cooling his heels in Kavanaugh’s waiting room, and then explains just what it is that gives Kavanaugh the power to keep the Hollywood A-list waiting like that:

Before Relativity commits to financing a particular movie — either through its slate deals with Sony and Universal or on its own — it’s fed into an elaborate Monte Carlo simulation, a risk-assessment algorithm normally used to evaluate financial instruments based on the past performance of similar products. Enough variables are included in the Monte Carlo for Wilson and his team to have reached the limits of their Excel’s sixty-five thousand rows of data: principal actor, director, genre, budget, release date, rating, and so on. After running the movie through ten thousand combinations of variables (in marathon overnight sessions), the computers will churn out a few hundred pages that culminate in two critical numbers: the percentage of time the movie will be profitable, and the average profit for each profitable run.

In fact, of course, what gave Kavanaugh all that power is exactly the same thing that gives any other Hollywood producer power: ready cash. In Kavanaugh’s case, the money came from Elliott Associates, the New York hedge fund. Which expected to get hedge-fund-like returns from its investment in Relativity, and instead lost money.

For some reason, there seems to be a huge amount of appetite for anybody saying that Netflix is being incredibly clever here. Rebecca Greenfield’s column desperately trying to work out how spending $100 million on this series could possibly make sense has now racked up more than 100,000 views. But the base case scenario for Netflix is exactly the same as the base case scenario for any other rich outsider walking into the shark tank that is Hollywood. Stars like Kevin Spacey and David Fincher will happily take Netflix’s money for however long Netflix is willing to spend it — as will the studios charging Netflix top dollar for the rights to stream their back catalogues. It’s a lovely new revenue stream for the industry, but it doesn’t mean that Netflix knows what it’s doing.

The truth of Hollywood is no mystery: as William Goldman famously said, nobody knows anything. Sometimes, people have hot streaks, and when that happens, David Carr will write a gushing column about what might be called the anti-Netflix approach: ignore the numbers and the heuristics, and just go out there and take creative risks. And in general, the biggest rewards always accrue to the properties which came from nowhere, doing something startling and new. Conversely, formulas only work until they don’t, and the problem with the Relativity approach is that it’s pretty much guaranteed to hit that inevitable failure, if it keeps on churning out formulaic movies.

With hindsight, the biggest risk that Netflix took with House of Cards was not getting Andrew Davies to write it. Stars and directors are all well and good, but if you’re aspiring to the highbrow, as Netflix is with this series, you need great writing first and foremost. The BBC series, written by Davies, was some of the best-written television ever, at the time; it was The Wire of its day. The remake, by contrast, has cringe-inducingly bad writing, from which the best acting and directing in the world could never recover. (Not that a great writer guarantees anything: even the incomparable William Goldman had more than his fair share of flops.)

In order to realize that a script isn’t up to snuff and needs to be comprehensively rewritten, you need a producer with more than just a Monte Carlo simulation: you need someone who can not only hire talent but can fire it as well. And in order to create the kind of television which will resonate and become a cultural touchstone, you need an impossible-to-formulate cocktail of creativity, inspiration, teamwork, and luck. The House of Cards remake is perfectly good, but it’s not that good. And, in turn, that’s why we, the viewing public, will never be puppets, dangling on the end of some TV quant’s strings. TV’s quants are clever, to be sure. But clever is easy to come by in Hollywood. And it’s never been remotely sufficient for success.

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