House of Cards Has No Advertising

February 14, 2013
By | 8 Comments

House of Cards carries no advertising, no commercial breaks. Without advertising, there is less need to spread episodes out over time. Without advertising, there is less pressure to regularize audience attention.

Netflix’s simultaneous release of all the episodes of House of Cards has generated commentary on binge viewing, social TV, the definition of “hit” TV (and here), and business models (and here).  Netflix is disregarding conventional audience management strategies, particularly the sequential release of one episode per week. For the past 80 years of commercial broadcasting, the weekly release of episodes served at least two purposes: to fill airtime economically by spreading narratives out over time, and, most important, to secure audience attention for advertisers on a regular basis.

Netflix has the freedom to release all episodes at once because Netflix is not in the business of organizing audience attention for advertising messages. That means Netflix does not have to regularize that attention through scheduling or measure that attention through ratings.  Linear commercial television manages “audience flow” with scheduling strategies designed to deliver certain targeted audiences to certain advertisers, as measured by ratings services. Viewers may believe television networks serve them; however, television networks’ primary customers are advertisers, and programs are a means of delivering audiences to those advertisers. Netflix’s customers, on the other hand, are not advertisers, but viewers. What advertisers prefer, a regular schedule that guarantees the weekly exposure of their products, need not shape the preferences of such viewers.

Why doesn’t Netflix schedule like HBO, then? HBO, a commercial-free premium subscription service, creates artificial scarcity by withholding already produced episodes, doling them out week by week. HBO began as a linear service designed to attract subscribers to cable services; its strategies are thus designed to build subscriber loyalty to itself and to cable operators; its announcements of audience ratings serve only to market its brand, not to measure audiences delivered to advertisers. Many observers assume that Netflix is evolving like HBO, shifting from a program buyer to program producer to ensure subscriber loyalty. However, Netflix offers something HBO cannot: asynchronous viewing of a deep catalog of programming. Although HBO offers HBO Go, that service is limited to cable subscribers and to HBO programming. Since asynchronous viewing is what Netflix can offer more cheaply and efficiently than HBO, Netflix needs to distinguish itself from HBO precisely on that basis to attract and retain subscribers. Hence, rather than weekly releases, episode by episode, Netflix has always offered audiences total control over their viewing schedule.

Some find it difficult to grasp how the seriality of House of Cards can work if all episodes are available at once. Seriality as a narrative strategy has been around at least since the Odyssey followed the Iliad, but in the modern era it has also functioned to ensure the maintenance of a revenue stream. Serialized novels enticed readers to buy the next issue of a magazine; serialized films tempted viewers to buy another ticket the next week; and serialized comic strips encouraged readers to buy a newspaper daily. By the early 1930s serialized radio dramas helped ensure that audiences would tune in daily to their “soap opera” and the soap advertisers’ messages.  More recently, serials such as The Sopranos helped build HBO subscribers’ loyalty.

Why, then, create House of Cards as a serial at all, if Netflix does not need to tempt audiences into repeated scheduled viewings? Probably because open-ended episode structure is still one of the best ways to encourage viewing of more than one episode. Increased viewership overall would help amortize the show’s high production cost–not because Netflix earns revenue on how many viewers see each episode but because viewer engagement will likely lead to more subscriptions to the service.

Netflix’s willingness to give the audience control over serial viewing challenges assumptions that the best way to control program costs is to eke out episodes over time, measuring demand, and then raising and lowering prices in response. Netflix will track viewership, not to adjust airtime prices for advertisers but to measure subscriber demand and, it hopes, an increase of subscribers. Like HBO’s move into original programming, Netflix’s strategy is risky, but it is designed to attract subscribers to its streaming service–not necessarily to a particular program. No doubt audience control of the pace of narrative consumption will affect social media conversations. But this strategy also challenges the necessity of synchronous viewing as a business model, a model based on the limitations of legacy technologies rather than on some inherent quality of seriality.

Netflix’s current business model also depends on the survival of advertising-supported networks, which are selling programming to Netflix as a new aftermarket. Thus, Netflix is not aiming to destroy linear ad-supported programming. Advertising revenue subsidizes far more programming than Netflix can currently plan to produce on its own. Instead, by offering a new profitable aftermarket for programming initially financed through advertising revenue, Netflix may become commercial television’s white knight. Netflix’s ability to expand offerings of commercial television programming will depend in part on its ability to keep attracting new subscribers. Offering viewers the option to binge, or watch multiple episodes in a sitting, or watch them over a longer time frame, may be Netflix’s best bet for attracting new subscribers.

The full significance of House of Cards, as an indicator of new business models and evolving cultural forms, is yet to be determined. Is it too much to hope that Netflix’s simultaneous release of a season’s worth of premiere episodes is a harbinger of unprecedented audience leverage in an industry too long accustomed to bottleneck control over audiences?


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8 Responses to “ House of Cards Has No Advertising ”

  1. Jeffrey Jones on February 14, 2013 at 11:43 AM

    Nice post, Cynthia, and so glad you wrote it. Chiming into the conversation here. You write: “But this strategy also challenges the *necessity* of synchronous viewing as a business model, a model based on the limitations of legacy technologies rather than on some inherent quality of seriality.”

    We just worked through Gillan’s “Must Click TV” in class last night (a book largely about time), and as with that book (and your comment here), we should probably entertain the *rituals* of narrative consumption more. Sure, there are bingers, and sure, we can focus on viewer control. But the habitus of consumption probably deserves greater foregrounding in discussing why we still love the serial form, and maybe why many people are willing participants in bottleneck control.

    • Cynthia Meyers on February 14, 2013 at 12:27 PM

      Good point! Seriality is clearly more than a business model or a technological form. I certainly wouldn’t assume that the rituals of narrative consumption will be radically transformed altogether by new media. I wonder if other narrative experts could chime in here. Thinking of 19th century novels, first serialized in magazines: today we don’t object to controlling the narrative pace by reading them in a bound volume. Netflix’s strategy is skipping over that premiere stage and going straight to audience control. Perhaps that approach will remain a niche experience, and the majority of serial experiences continue to be subject to time-based bottlenecks, because, as you say, we like it that way!

  2. Cynthia Meyers on February 14, 2013 at 8:31 PM

    House of Cards showrunner explains:
    They didn’t start out expecting to release all episodes at once!

  3. Neil Verma on February 15, 2013 at 9:37 AM

    The original House of Cards also ran without ads on the BBC, I think. Any thoughts on that as a contrasting model? Maybe there’s something more to be explored about these two case studies in “serializing for” two different non-commercial audience in two different nations with very different media systems and viewer habits.
    Also, I wonder if you have any ideas about the more cynical argument to be made about all this: House of Cards doesn’t need advertising because it IS advertising — advertising for the Netflix model.
    Thanks for your fascinating post, Cynthia!

    • Cynthia Meyers on February 15, 2013 at 12:22 PM

      Yes, House of Cards definitely markets Netflix! I think that’s the upshot of my post here. But since I don’t view marketing or advertising as evil, I wouldn’t say that is a cynical view at all! Expensive content as a loss leader for a new platform is a tried and true strategy. (HBO is the case study for the dissemination of cable to communities that had free over the air TV.) That’s why it doesn’t really matter how many viewers actually watch all the episodes; House of Cards’ success depends more on how it raises awareness and subscription rates for Netflix.
      Likewise, it could be argued that Downton Abbey has done the same for PBS–another non-ad supported outlet that depends on a more direct relationship (via donations) with its audience than commercial TV does.
      As to BBC and other business models, I think there could be a lot to look at there. The evolution of commercial/noncommercial business models in Europe is fascinating in its own right–Sean Street and Michele Hilmes have pointed out how there are more points of congruence than difference between the US and the UK models than we think.
      My overall point is that Netflix has the freedom to challenge the time bottleneck imposed on serial distribution–not that it’s the best way to distribute serials–and I hope it augurs greater audience autonomy overall (my idealism exposed!).

  4. Jackson on February 15, 2013 at 3:10 PM

    How does product placement impact the relationship between narrative and advertising in this/these cases? Would it have existed in the BBC’s version in the 90s?

    • Cynthia B. Meyers on February 16, 2013 at 4:31 PM

      Product placement, or the integration of advertising into the narrative, is another fascinating topic. Recently the trend has been toward brand integration–more subtle than simply showing a shot of a product. (See Erin Copple Smith’s great Antenna post!) I don’t know what, if any, product placements there are in House of Cards at Netflix or BBC (anyone know?). I have written a book (shameless plug here) forthcoming this Fall exactly about this issue–how advertising shaped entertainment in 1930s-40s radio (A Word from Our Sponsor: Admen, Advertising, and the Golden Age of Radio).
      As to Netflix, I neglected to link to this great interview with Netflix’s Ted Sarandos–do check it out!