Opinion

Felix Salmon

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.

Comments
9 comments so far | RSS Comments RSS

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,

If that was really their logic then they are insane.

Everyone I know who liked the original is avoiding this show out of fear that it will be a load of crap in comparison and ruin memories of the original. It’s not like American tv networks have a particularly good record of remaking successful UK shows (Though the new Yes Prime Minister sounds just as bad and will also be avoided)

Posted by ABT | Report as abusive
 

BTW, your comments login is throwing up a nonsensical developer login and denial and then logs you in anyway. Oopsie.

One of the first books about the tension between numbers and art is Stephen Bach’s book about United Artists and Heaven’s Gate called Final Cut. A major theme is that UA was being pulled toward a “invest in a lot of films” like they’re a basket of securities.

Posted by jomiku | Report as abusive
 

NFLX will eventually learn that their dollars are always better spent acquiring great content from others. If they did nothing but offer all the best content from the last 20 years of Public Broadcasting that alone would be worth the full current NFLX subscription price.

The reason iTunes rocks everyones socks is they cut the cost of a good song from 12.99 (the cost of buying the whole cd)to a buck an change. Netflix did the same thing by basically lowering the cost of cable tv (less sports programming) to 9.99/month. Roughly the same 80%ish reduction in cost coupled with a similarly massive leap forward in user interface, pretty attractive!

Netflix’s big problem is that the cable co’s figured out broadband not content is their killer app. Cable TV rates are up slightly in last 5 years while the broadband cable internet rate has increased 100%.

Over the next 5 years Comcast and TWX will see zero tv revenue growth (they’ll raise the average bill but enough people will cut the cord that the revs will flatline.) The response will be simple, ruthlessly jack up their broadband rates because their connection speeds crush regular DSL and “super cable speed DSL” is already priced at a premium to cable broadband. When broadband alone hits $99/month that will crimp NFLX’s growth.

Consumers will gripe and moan but if you look what AT&T and VZ are getting for a couple GB/month of data… my brother pulls 100 times those limits through Comcast’s cable network every month…

Posted by y2kurtus | Report as abusive
 

I good give a million examples of foreign movies ruined by being redone in American cinema, but one of the best examples is “The Vanishing”

http://johnkennethmuir.wordpress.com/201 0/03/22/an-homage-to-a-vanished-loved-on e-the-vanishing-1988-vs-the-vanishing-19 93/

And it was done by the same director!!!

Posted by fresnodan | Report as abusive
 

Re Relativity: Anybody running 10,000 trials in a spreadsheet is not using predictive analytics. They are creating marketing copy.

Posted by nnja | Report as abusive
 

This post sort of lacks a central argument. Are you mad because you don’t like the show, or mad because you think making it was a bad business decision, or mad because they made that business decision using a bad heuristic, or mad because Andrew Davies wasn’t involved? You are clearly mad about something.

Nevertheless, it seems like a submerged premise in this article is that you don’t like the show…

I liked the original quite a bit, but so far most of my friends have thought the new one was fine. My wife and sister enjoy it, and I think it is solid if not spectacular. Why should I care if Netflix wants to waste money creating overpriced entertainment for me?

Posted by QCIC | Report as abusive
 

If the quants actually could turn us all into puppets, Facebook would be a $1,000 stock.

Posted by johncabell | Report as abusive
 

Modern day Sherman & Mr Peabody update the WABAC machine, the biggest stoops are the people buying Big Data for this application ..

Posted by Woltmann | Report as abusive
 

These people should really read Art De Vany’s Hollywood Economics – the algorithims are a complete waste of money – the statistics of Hollywood are too wild for models.

Posted by NotPredictable | Report as abusive
 

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