Good afternoon from Los Angeles, wherever you may be. Everyone I meet has an opinion on the TV business, and Netflix in particular. It's a byproduct of living in Los Angeles, and covering Hollywood. Many of these opinions are a waste of time -- self-serving, pedantic or worse -- but most of them are welcome. Anything that inspires people to think hard and proffer an opinion is worth further investigation, especially if you have a contrarian streak (as I definitely do).
Over the past year, I have heard over and over again that Netflix is cancelling a lot of shows. Studio executives told me Netflix refused to renew their shows for more than three seasons. Agents told me Netflix didn't want to pay their clients the bonuses that come after later seasons. Some journalists have interpreted this as Netflix cutting costs. Rival executives have portrayed this as another example of Netflix's insensitivity to the creative community. Even Netflix employees fret about the future of shows they worked on.
You hear something enough times and you come to believe it is true, and so I grew to accept a maxim as fact: Netflix doesn't let its shows live as long as other networks. I assumed I would write a story examining the frustration of fans and the creative community, and explaining why Netflix approaches renewing shows differently from some other networks.
But then a funny thing happened as I dug into the numbers. As it turns out, Netflix is no quicker to drop shows than other networks, according to data compiled by Bloomberg. Of the English-language scripted programs that debuted on Netflix from 2013 to 2017, about 19% lasted more than three seasons. That puts the company squarely in between CBS, the most-watched U.S. TV network, and HBO, the most-popular premium cable network. Almost 50% of Netflix shows made it to season three, again comparable to HBO.
It's the company's huge programming budget — forecast to top $14 billion this year — that makes cancellations loom large. You make more shows, you cancel more shows. The frustration with Netflix also illustrates that Hollywood is still coming to grips with the company's new way of doing business — and the less-than-transparent data behind its decision-making. For example:
- The company's metrics for valuing programs are different from most networks. Netflix does judge programs based on the number of viewers and how much time they spend watching a show. But that's only part of the equation. It uses its own calculation — dubbed efficiency — to measure the value of a show relative to its cost.
- Unlike most TV networks, Netflix primary goal is signing up new users. When viewers watch a particular show in their first month as customers, it suggests that program drew them in. When viewers only watch a few shows, those shows are seen as key to retention. (These metrics matter less in markets like the U.S., where Netflix has already attracted a lot of customers.)
- Netflix doesn't release viewership numbers. The service is commercial-free, and the company argues such numbers only matter to advertisers who buys spots based on the size of a show's audience.
Many readers pointed out that Netflix has sold itself as being different from other networks. Having a comparable cancellation rate may not be a good thing if you are trying to brand yourself as an outsider blowing up the status quo.
(Netflix would counter that its cancellation rate reflects the other ways it is different from rival studios and networks. It doesn't order pilots, which most networks use to filter out the chaff.)
But Netflix officials are also hyper-sensitive to criticism that the company isn't as talent-friendly as some rivals. Disney, HBO, Amazon, Apple, CBS and NBC will all prey on any scent of dissatisfaction with the market leader as they create rival streaming services. Many of them have already changed their dealmaking to better compete with Netflix for talent.
That's one reason you've seen Netflix change its strategy. The company has held viewership update calls with producers and outside studios, and released some viewership data publicly. But it still doesn't release ratings for every show to the public. With its output scheduled to increase further and its bar for quality rising every year, Netflix is likely to disappoint more fans and viewers like this person outside its headquarters. -- Lucas Shaw
Post a Comment