The Media Equation: TV Foresees Its Future. Netflix Is There.

But Netflix already has.

Netflix knows a little about transformation. It’s worth remembering that it managed to go from the largest user of the Postal Service to the largest source of download traffic on the Web in the span of months, not years. After a big stumble on pricing in 2011, Netflix recovered and then some, using its expertise in technology and algorithms to accrue over 36 million users worldwide, a number that will probably grow when it announces its earnings on Monday. Its stock has already risen more than 200 percent in the last year.

But few would have guessed that Netflix’s software expertise would extend to entertainment produced by top-flight actors, directors and writers. Beginning this year, Netflix streamed four original series — “House of Cards,” “Hemlock Grove,” “Arrested Development” and “Orange Is the New Black.” The shows earned generally good notices, kicked up a great deal of chatter, and, drum roll here, were nominated for 14 Emmys. It was the first time an Internet-only service earned a seat at the big-boy table in television.

The Emmys were the most prominent marker of change, but hardly the only one, in a week full of headlines about what TV is becoming. It’s not their first foray, but if Apple and Google move further into the television space, they are sure to collide with not only traditional players, but Netflix, Amazon, Sony and Intel. And Aereo, which so far is a small but persistent player backed by Barry Diller, won another court victory for its plan to totally upend broadcast networks, by streaming their content without compensating them.

Meanwhile, what were the traditional television players up to? Squabbling yet again over retransmission fees, with a standoff between CBS and Time Warner Cable that could set off a blackout, driving audiences to other ways of viewing. The only constant was steady price hikes on cable bills.

The future of television — a place where cable is not the only answer for average viewers — just drew a little closer.

Netflix has earned its place in that future. It won some victories on the programming side by financing creators and staying out of their hair, an approach invented and perfected by HBO. Given that HBO pulled in 108 Emmy nominations last week, Netflix has a long way to go. But David Bianculli, a professor at Rowan University in New Jersey who blogs at TV Worth Watching, suggests another view.

“It took HBO 25 years to get its first Emmy nomination; it took Netflix six months,” he said. In that sense, Netflix is more like Pixar than Hulu, showing that a Silicon Valley company could produce creative, successful programming.

Ted Sarandos, Netflix’s chief content officer, told The New York Times last week that the Emmy nominations solidified the idea that “television is television, no matter what pipe brings it to the screen.”

He’s right. Television used to come over the air or through the coaxial cable. Now it seems to come from everywhere on all kinds of devices.

Both Google and Apple continue to hover around the honey pot of television. Apple’s rumored effort at making a TV set has been like Godot — much anticipated, never arriving — but in the meantime it is in talks with distributors like Time Warner Cable and programmers like Walt Disney to explore collaboration on apps.

Google has been in talks with program providers, including cable channels, about distribution over the Internet, a more complicated approach — the cable systems that distribute programming would be left out of the mix — with a higher risk in execution.

In both instances, the companies are taking the same wine and putting it in a new bottle, creating a new interface to replace clunky remotes while hoping to gain a lot of valuable data in the process. Figuring out how to put a new skin on the same database can be lucrative — Weather.com, a huge business, is built on existing government data — but it’s one thing to present better navigation, and another to produce better television.

Apple reinvented the music industry on its terms and in doing so cut the legacy music business in half. The TV business, which is still sitting on healthy earnings, if not ratings, saw that movie already and wants no part of it.

But Apple is nothing if not relentless. One of its reported approaches is to enable ad-skipping while making a payment to ad-supported networks. “In essence they were saying that they would cut them a check while destroying their business model,” said Craig Moffett, a telecommunications analyst. “How long do you think that conversation lasted?”

Meanwhile Google is selling its ability to make content more visible and searchable; that sounds like the favor Google did for the newspaper business, which, like music, is half the size it once was.

E-mail:carr@nytimes.com;

Twitter: @carr2n

Gadgetwise Blog: Q&A: Streaming Netflix Video on Multiple Devices

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Gadgetwise Blog: Q&A: Streaming Netflix Video on Multiple Devices

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Bits Blog: Apple and Netflix Dominate Online Video

Ryan Anson/Agence France-Presse — Getty Images Steve Jobs discussing the Apple TV in 2010. In a recent study, the NPD Group, a research firm, said Apple was by and large the leader for home video downloads.

Now that the video rental store is all but dead (see: Blockbuster), many people are turning to Internet services to get TV shows and movies. By some measures, Apple is No. 1 in online video, but by others, Netflix is leading.

Apple on Wednesday released new statistics on the videos it provides in the iTunes Store. The company said customers were downloading 800,000 television episodes and 350,000 movies a day.

In a recent study, the NPD Group, a research firm, said Apple was by and large the leader for home video downloads. For television shows, iTunes accounted for 67 percent of this market in 2012, and Microsoft’s Xbox video service was a distant second with 14 percent of the market, NPD said. For movies, iTunes had a 65 percent share of the market, with Amazon and Microsoft far behind at 10 percent each, it said.

Another popular method for watching movies and TV online is paying a subscription and streaming as many as you want. In the subscriptions-based video streaming market, Netflix is dominant, with a 90 percent share, and Hulu Plus and Amazon are still hardly relevant.

To put things in perspective, subscription-based streaming is the most popular method for watching online video. For all the movies watched at home in the first quarter of 2013, 19 percent of consumers watched a movie using a subscription-based service like Netflix, and 5 percent downloaded a movie rental from an on-demand service like iTunes, according to Russ Crupnick, an NPD analyst who follows the online video industry. About 74 percent of consumers watched a movie on a DVD or Blu-ray disc they bought or rented, he said. (The numbers are not mutually exclusive; some people watch movies on Blu-ray, Netflix and iTunes.)

Apple, to date, has not entered subscription-based video streaming. Instead, it has teamed up with companies that offer that service. The Netflix and Hulu Plus apps are available on the Apple TV.

Apple on Wednesday also announced new partnerships with Home Box Office and ESPN. Coming to the Apple TV are the HBO GO app, which allows HBO subscribers to stream the network’s programs, along with the WatchESPN app, which allows cable TV subscribers to stream some ESPN channels. Apple TV owners can get the apps by downloading a free software update.

DreamWorks and Netflix in Deal for New TV Programs

In a multiyear deal announced early Monday, DreamWorks Animation will supply a flood of new episodic TV programs to the Internet streaming service. The partnership calls for 300 hours of original programming, perhaps the biggest commitment yet to bring Hollywood-caliber content to the Web first.

The new programs will be “inspired” by characters from past DreamWorks Animation franchises, which include “Shrek” and “The Croods,” and its coming feature films. Series will also come from Classic Media, which the studio bought last year. Classic Media’s holdings include characters like Casper the Friendly Ghost, Lassie, She-Ra and Mr. Magoo.

The agreement is the latest in the hotly competitive market for streaming content, with major services like Netflix, Hulu and Amazon vying to capture viewers who are gravitating to the Web, especially younger ones.

Until now, DreamWorks Animation’s primary focus has been the release of about two costly movies a year. Its success record is strong, but one miss can send its stock price plummeting, as was the case late last year, when “Rise of the Guardians” severely underperformed expectations; the company eventually took an $87 million write-down tied to the film.

Investors on Monday responded favorably to the announcement, driving Netflix shares up more than 7 percent, to $229.23, and DreamWorks Animation shares up about 4 percent, to $23.74.

The studio’s characters currently appear on four TV shows. Three are made by Nickelodeon under a licensing agreement, while DreamWorks Animation supplies a fourth, based on “How to Train Your Dragon,” to Time Warner’s Cartoon Network.

The first of the new DreamWorks Animation programs will appear on Netflix sometime next year. Netflix has exclusive rights to the series in all of the countries in which it operates; it has about 27 million streaming subscribers in the United States.

A DreamWorks Animation spokeswoman declined to provide more details, including financial terms. Jeffrey Katzenberg, the studio’s chief executive, plans to outline his TV strategy in a conference call on Tuesday with analysts and reporters.

DreamWorks Animation had three primary TV options: starting a cable channel of its own, perhaps in partnership with 21st Century Fox, which distributes its movies; teaming with an upstart children’s network like the Hub (or taking it over); or bypassing cable completely and going with Netflix.

Mr. Katzenberg and his company parted ways with HBO in 2011, opting instead to distribute their films and television specials through Netflix. Mr. Katzenberg and Netflix announced this year that a new episodic series called “Turbo: F.A.S.T.” would come to the streaming service in December. (It is based on “Turbo,” a film that arrives in theaters on July 17 and features a speedy snail.)

For Netflix, the DreamWorks Animation programming will help fill a hole left by Nickelodeon. Because of a dispute over terms, Netflix declined this year to renew its contract with Viacom, Nickelodeon’s corporate parent. (Viacom in turn made a deal with Amazon this month for Nickelodeon shows like “Dora the Explorer.”) New films from Disney and Pixar will move to Netflix from Starz in late 2016.

Children are avid streaming consumers, particularly overseas, and cartoons allow the company to pitch itself to parents as a commercial-free alternative to television. Animated shows for younger viewers are also less likely to appear on the pirated-content sites that compete with Netflix for viewers.

Common Sense: Netflix Chief Looks Back on Its Near-Death Spiral

It was the thousands of e-mails that poured in from angry and disappointed customers.

“I realized, if our business is about making people happy, which it is, then I had made a mistake,” Mr. Hastings told me this week, in a rare public comment on an episode that could have destroyed the company. “The hardest part was my own sense of guilt. I love the company. I worked really hard to make it successful, and I screwed up. The public shame didn’t bother me. It was the private shame of having made a big mistake and hurt people’s real love for Netflix that felt awful.”

This week, Netflix announced that it gained three million subscribers globally in the first quarter and that revenue for the quarter exceeded $1 billion, a record for the company. On Tuesday, the stock jumped 22 percent, the first time it has traded over $200 since the Qwikster episode, and it is up 135 percent so far this year, making Netflix the best-performing company in the Standard & Poor’s 500-stock index. The company is basking in the critical glow of its original series, “House of Cards,” and this month narrowly surpassed HBO in total subscribers.

In the annals of corporate missteps, there are few parallels to such a rebound from what once looked like a death spiral, especially in the momentum-driven world of technology. Zynga, the online game maker, and Groupon, the Internet coupon company, are struggling with brutal competition. In an old-economy industry like retail, J. C. Penney was in the midst of a similarly bold attempt to reposition the company when it fired its chief executive, and is now fighting to survive.

How did Netflix simultaneously manage both a fundamental transformation of the company and a public relations disaster?

Mr. Hastings said he realized that the company’s attempt to both raise prices and separate into two companies, one the legacy DVD-by-mail business and the other the up-and-coming broadband streaming business, was trying to do too much too fast. Angry subscribers abandoned the company in droves (800,000 in the fourth quarter of 2011 alone), revenue missed estimates and the stock plunged.

“I messed up,” Mr. Hastings wrote in an unusually forthright September 2011 blog post. Citing the precedents of AOL and Borders Books, which struggled or failed to make the digital transition, “my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming.” But in the rush to accelerate the transition, he wrote, “In hindsight, I slid into arrogance based upon past success.” He also made a video apology.

Mr. Hastings said he didn’t expect the apology alone to “turn it around,” adding, “I wasn’t naïve enough to think most customers care if the C.E.O. apologizes, but I thought it was honest and appropriate.”

The mea culpa resonated, though, with some important constituencies, including some Wall Street analysts, who were punishing the company’s stock. Richard Greenfield, an influential media analyst at BTIG, said that he was impressed that Mr. Hastings “realized his mistakes and openly admitted them.”

“He dusted himself off, stood back up and started running,” Mr. Greenfield said. “Very few people can do that.”

Still, Mr. Hastings said, “The situation made me nervous and very focused.

“I couldn’t say with confidence that we’d recover. We were in a place that was quite risky. We didn’t have the reserves to make a second stumble.”

On the other hand, he didn’t panic, and he didn’t lose confidence. Although he made some big changes, like scrapping Qwikster, he never questioned his original vision for the company, which he helped found in 1997. Nor did he lunge at supposedly transformative opportunities that were pressed upon him — a lesson he learned from a four-year war with Blockbuster that began in 2004, when Blockbuster, then the dominant and much larger DVD distributor, tried and failed to crush its upstart competitor.

“There were elements of panic in my reaction back then,” Mr. Hastings said. “We got desperate and we did some dumb things.” (He cited online advertising on the Web site; starting Red Envelope, an independent film producer and distributor, since shut down; and buying DVDs out of the Sundance Film Festival.) “After we eventually won the Blockbuster battle, I looked back and realized all those things distracted us. They didn’t help, and they marginally hurt. The reason we won is because we improved our everyday service of shipping and delivering. That experience grounded us. Executing better on the core mission is the way to win.”

Bits: Netflix Allows Americans to Share Viewing Choices with Facebook Friends

Netflix

You no longer have to ask your friends what they are watching on Netflix. Instead, you can now simply peer over their digital shoulder.

Netflix announced Wednesday that it will begin offering United States customers the ability to connect their Netflix account to Facebook to see what their friends are watching on the video rental service. They will also be able to share their own favorite videos.

In a blog post on the company’s Web site, Cameron Johnson, director of product innovation at Netflix, said that the latest sharing feature would offer two main views: customers’ favorite videos and those that they have recently watched on the service.

“You’ll see what titles your friends have watched in a new “Watched by your friends” row and what they have rated four or five stars in a new “Friends’ Favorites” row,” Mr. Johnson wrote. “Your friends will also be able to see what you watch and rate highly.”

For people worried that a secret show will appear in their Facebook timeline for all to see, Netflix gives people explicit options to decide what they share to Facebook.

“You are in control of what gets shared. You can choose not to share a specific title by clicking the “Don’t Share This” button in the player,” Mr. Johnson wrote.

The sharing feature has been available in other countries for some time. But before Netflix could enable it in the United States, the company had to persuade Congress to amend a 1988 law, called the Video Privacy Protection Act, that prohibited video service providers from sharing customers’ viewing history without their consent.

It’s unclear whether American consumers really want to see what their inflated social networks are watching on television. Although the idea sounds great, if your Aunt Mildred is watching World War I documentaries, and your nephew Luca is watching SpongeBob SquarePants, your social feed might not be very useful.

But investors thought the news was great for Netflix, sending the company’s shares up 7 percent in midday trading on Wednesday.

‘House of Cards’ Arrives as a Netflix Series

Featured in “House of Cards,” from far right, Michael Kelly, Robin Wright and Kevin Spacey.

EARLY in the new Netflix series “House of Cards” the narrator and card player Representative Francis Underwood, played by Kevin Spacey, looks straight into the camera and tells viewers: “Power is a lot like real estate. It’s all about location, location, location. The closer you are to the source, the higher your property value.”

A sortable calendar of noteworthy cultural events in the New York region, selected by Times critics.

The writer Beau Willimon, left, with Allen Coulter, one of the show’s directors.

Underwood is speaking at a presidential inauguration, just outside the Capitol in Washington. As viewers observe the swearing-in he asks in a delicious Southern drawl, “Centuries from now, when people watch this footage, who will they see smiling just at the edge of the frame?” Then Underwood comes into frame again. He’s just a few rows away from the president. He gives the camera a casual wave.

Underwood, having been spurned in his bid to become secretary of state, is on a quest for power that’s just as suspenseful as anything on television. But his story will unspool not on TV but on Netflix, the streaming video service that is investing hundreds of millions of dollars in original programming. Its plan for showing “House of Cards,” an adaptation of a 1990 BBC mini-series set in Parliament, will itself be a departure from the usual broadcast approach. On Feb. 1 all 13 episodes will be available at once, an acknowledgment that many of its subscribers like to watch shows in marathon sessions.

Another 13 episodes are already in production. Odds are, then, that viewers are going to spend quite a while inside Underwood’s head as he tricks, coerces and sometimes intimidates his opponents. “He makes you complicit in an odd way,” said David Fincher, the acclaimed filmmaker who directed the first episode of the new series.

This is accomplished by having Mr. Spacey break the fourth wall, or address the audience directly. The original “House of Cards” did it too.

“I loved the idea of being intimately part of the thought process of this lead character, because he could take you aside and explain to you what he was doing and why he was doing it and where it was headed,” Mr. Fincher said.

He and the other producers won’t reveal exactly where their modern-day “Macbeth” ends up, though a shot at the presidency isn’t a bad guess. The characters introduced in the first two episodes include Representative Peter Russo, a pawn for Underwood, played by Corey Stoll (Hemingway in “Midnight in Paris”); Linda Vasquez, the president’s chief of staff, played by Sakina Jaffrey; and Underwood’s conniving wife, Claire, played by Robin Wright. “In politics there’s ambition, desire, lust, betrayal — all the same kinds of things we exhibit and experience in our own everyday lives,” said Beau Willimon, the show runner. Mr. Fincher, Mr. Willimon and many of the other players — all basically television novices — were brought together by Media Rights Capital, an independent studio that had optioned the rights to “House of Cards” thanks to an intern who recommended it to Mordecai Wiczyk, the studio’s co-founder.

Mr. Fincher was finishing “The Curious Case of Benjamin Button” when he was introduced to the BBC mini-series by an agent. “David said, ‘I’d love to executive-produce this, and I’d like to bring Eric Roth with me,’ ” Mr. Wiczyk recalled. “Generally speaking, when you get that phone call, you just say yes. Which I did.”

Mr. Roth had written the screenplay for “Benjamin Button.” Next, Mr. Fincher said, they had to “find a writer who would do the due diligence to transplant parliamentary politics to Washington.” Enter Mr. Willimon, who had written the play “Farragut North” and turned it into the film “The Ides of March.” After watching the BBC mini-series, he said, “I saw tons of great opportunities to make it our own, to make it contemporary, to broaden its scope and deepen its story.” It’s a “reinvention,” he added, not a mere remake.

Netflix Fixes a Disruption to Its Video Streaming

Should drowsy driving be prosecuted like drunken driving? Or, Room for Debate asks, is nodding off simply an accident – like hitting a patch of ice?

Without proper controls, the use of unmanned aircraft could threaten privacy.

Media Decoder Blog: Netflix Reaches Deal to Show New Disney Films in 2016

Evan Agostini/Associated Press Ted Sarandos, Netflix’s chief content officer, called the deal with Disney “a bold leap forward for Internet television.”

LOS ANGELES — Walt Disney Studios said on Tuesday that it had completed a deal to show films from its Disney, Pixar and Marvel banners on Netflix, replacing a less lucrative pact with Starz.

The agreement is the first time one of Hollywood’s big studios has chosen Web streaming over pay television. Netflix has made similar “output” deals with smaller movie suppliers like DreamWorks Animation and the Weinstein Company. But all of the majors — Disney, Paramount, Universal, Warner Brothers, Sony and 20th Century Fox — have stayed with Starz, HBO or Showtime until now.

Library titles like “Dumbo,” “Alice in Wonderland” and “Pocahontas” will become available on Netflix immediately, Disney said. Netflix will begin streaming new release Disney films starting in late 2016, when the current accord with Starz expires. The deal announced on Tuesday includes direct-to-DVD movies.

Financial terms were not disclosed, but analysts estimated that the deal could be worth about $300 million annually for Disney. The deal does not include films from DreamWorks Studios, which has a theatrical distribution arrangement with Disney but relies on Showtime as a pay-TV partner. Nevertheless, the deal will include movies from Lucasfilm, which Disney is acquiring.

Ted Sarandos, Netflix’s chief content officer, called the deal “a bold leap forward for Internet television.” Janice Marinelli, president of Disney-ABC Domestic Television, said in a statement, “Netflix continues to meet the demands of its subscribers in today’s rapidly evolving digital landscape.”

The so-called pay TV window is one of the entertainment industry’s most important business tools. In the past, Starz, HBO and Showtime paid about $20 million a picture for exclusive rights a few months after films arrive on DVD. But Netflix — capitalizing on a consumer shift to streaming content on computers, tablets and Internet-connected televisions — has been aggressively going after the business by offering more lucrative terms.

With the Disney deal, Netflix will be able to offer customers exclusive access to a pipeline of films that are reliably some of the year’s biggest box-office successes. Netflix has also made it a priority to strengthen its children’s and family offerings.

As for Starz, anything that increases the marketplace clout of Netflix is damaging. Moreover, Starz does not have the original programming strength of HBO or Showtime to fall back on.

Starz will continue to have films from Sony, but the absence of Disney movies will be a hole in its offerings. In a statement on Tuesday, however, Starz said that it had decided to part ways with Disney, not the other way around.

“Our decision not to extend the agreement for Disney output past that time allows us the opportunity to implement our plan to dramatically ramp up our investment in exclusive, premium-quality original series, which will best meet the needs of our distributors and subscribers,” the company said in the statement.