netflix- the show canceller

https://deadline.com/2019/03/netflix-tv-series-cancellations-strategy-one-day-at-a-time-1202576297/

Andreeva, N. (2019). Feeling The Churn: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Can’t Move To New Homes. [online] Deadline. Available at: https://deadline.com/2019/03/netflix-tv-series-cancellations-strategy-one-day-at-a-time-1202576297/ [Accessed 26 Sep. 2019].

(Andreeva, 2019)

My opinion/thoughts: 

This article could be biased, as it is about cancellations of shows which of course is going represent a negative view of any platform. The main thing I learned from this is that success is based on if it's "fashionable"; bringing in more subscriptions, rather than a loyal fan base. Like phones, consumers want whats newest rather than best. 

Netflix, as suspected rewards its own studio productions more- which is expected as they can earn money in other ways than just subscriptions- such as merch. As someone from a different studio, Netflix may be a risky move. It wants whats new and short, rather than quality and long-lasting. Which falls under the stimulus of new media and the internet. 

Its good for those who need the funding, but there is no potential for growth if it's not already in the place at the start, so it would not be good for those who aren't well known. 

What I do not know is how you can get shown on Netflix, or how to get involved in their studios. I would like to research this further. 

How the experience is changed for consumers?

despite being able to watch 'what they want when they want', as a positive forward move from traditional television; shows are less quality and quantity- even if you're a loyal fan to a show, they will rid of it and distract you with something new. Which doesn't sound very resourceful, but more of a distraction. 
The good:

'Netflix employs a “cost-plus” model, offering to pay upfront a show’s production costs plus a premium of 30%+ of the costs.'
'Netflix subtracts a distribution fee, outside studios are at break-even or in positive territory from Day 1, versus having to deficit-financed series for the first few seasons on most traditional networks. '
- 'Netflix’s deals include bump/bonuses after each season that are getting progressively bigger.' Rewarded for successful work '.from hundreds of thousands to millions of dollars — as the studio starts to pay off the shows’ back-end'

The in-between:
Successful shows are ones that drive subscriptions and viewership.
Shorter seasons, ten per season; more is seen unneeded expense. 

The bad:

-Not only with Netflix, with other streaming sites, shows are ending quickly. There is a constant need for 'new' trending shows. 
- For a show to be considered successful it has to last for at least six years. 
- If a show is canceled, Netflix has rules that stop the show moving onto anther network or service for two to three years. Which, essitenly kills off the show entirely. 

-in exchange for the upfront payments, outside studios give up the potential upside that normally comes up with owning a long-running successful series, including off-network and international sales.

-There are a few biased attitudes between Netflix originals vs other series; 'For series from outside studios, which I hear cost about 20% more than their Netflix-produced counterparts, I hear the built-in payment increases do not skyrocket as much but still are bigger after Season 3, Season 4 and beyond.'

- If the audience number does not show to their expectations, the show will be canceled. 'Netflix is data-driven'

- The shows predicted successfulness is based on the first and second season, rather than its third or fourth. 

-Even if you have a loyal fan-base, if the show doesn't drive sign-ups it's not deemed worthy. 

- 'Netflix’s strategy to grow the subscription base is focused on introducing new series all the time, sometimes multiple ones each weekend. According to industry observers, fans of some of the canceled series would be disappointed by their demise but not upset enough to drop Netflix as there is a new product coming out all the time that catches their attention.' this to me says that are shows are not necessarily valued or respected, Its whats about what is trending and is popular. Not about its value or its fan-base.

-Netflix has been known to change promised fees depending on their success, sometimes decreasing from the original deal. 

Quotes:

The standard series regular contracts are for six years, which has been considered a threshold for a show to be deemed reasonably successful. 

The Internet network also is assuring its series will remain Netflix exclusives even after their cancellation, with a moratorium allegedly built into deals that prevent axed shows from moving to a new home. Netflix deal would not allow for the comedy to move to another streaming platform.

I hear there is a standard clause in the deals for Netflix series from outside studios that prevents the shows from airing elsewhere for a significant period, said to be two to three years, making a continuation on another network/platform virtually impossible.

It is widely known that Netflix employs a “cost-plus” model, offering to pay upfront a show’s production costs plus a premium of 30%+ of the costs. Even after Netflix subtracts a distribution fee, outside studios are at break-even or in positive territory from Day 1, versus having to deficit-financed series for the first few seasons on most traditional networks. But in exchange for the upfront payments, outside studios give up the potential upside that normally comes up with owning a long-running successful series, including off-network and international sales.

Instead, Netflix’s deals include bump/bonuses after each season that are getting progressively bigger. While the payments are relatively modest after Season 1 and a little bigger after Season 2, I hear they escalate after Season 3, especially for series owned by Netflix — sometimes from hundreds of thousands to millions of dollars — as the studio starts to pay off the shows’ back-end. For series from outside studios, which I hear cost about 20% more than their Netflix-produced counterparts, I hear the built-in payment increases do not skyrocket as much but still are bigger after Season 3, Season 4 and beyond.

“It’s a combination of things. When we’re investing, we decide how much to invest based on the audience that will show up,” Netflix’s head of original content Cindy Holland said of the streamer’s cancellation decisions at the INTV conference in Israel last week. “If the audience doesn’t show up, we think about the reason to continue to invest in something that doesn’t do as well as we had hoped. Obviously, critical acclaim is important too, but we’re really about trying to stretch our investment dollars as far as we can and make good on our investors’ money – it’s theirs, not ours.”

For the most popular shows, like blockbuster hit Stranger Things, renewals are a no-brainer as each new season is an event, driving viewership and subscriptions. (Being owned by Netflix, Stranger Things also is a moneymaker for the company, with auxiliary revenue streams such as theme park attractions and merchandising, including Halloween costumes.)

But for everyone else, there is intense scrutiny. Netflix is unabashedly data-driven, with many of its decisions based on algorithms. That’s how the network reportedly switched from the initial (and traditional) 13-episode seasons to seasons of 10 episodes or less. Word is that those shorter seasons are considered optimal for consumption, and any additional episodes beyond 10 a season do not add value, so they are an unnecessary expense for the network.

The same goes for the number of seasons. If a show has not broken out in a big way during its first couple of seasons, there has been chatter that Netflix does not see significant growth potential beyond Season 3 (and sometimes beyond Season 2) as viewers tend to move on to the next hot new show in an overcrowded TV universe.

Netflix

As for acclaim, I hear anecdotally that strong reviews from critics, which One Day at a Time has in spades, could get a show a second-season renewal at Netflix (but rarely a third). Beyond that, only major awards recognition counts because awards — along with strong word of mouth/curiosity — are thought to help drive subscriptions. Despite its acclaim, One Day at a Time, perhaps hindered by its multi-camera format, has not been able to land big nominations.

I hear One Day at a Time came close to cancellation last year when the show’s producers and talent rallied fans in a spirited renew-the-show campaign. Netflix ultimately gave it a reprieve, but it came with a warning. Despite the fact that One Day at a Time’s viewership reportedly had grown between Season 1 and 2 and Seasons 2 and 3, word is Netflix brass claimed its numbers still were not where the network wanted them to be.

I hear that, according to Netflix’s data, beyond Season 2-3, middle-of-the road series — even those with loyal fan base like One Day at a Time — would not generate significant new signups.

But shiny new things will. Netflix’s strategy to grow subscription base is focused on introducing new series all the time, sometimes multiple ones each weekend. According to industry observers, fans of some of the canceled series would be disappointed by their demise but not upset enough to drop Netflix as there is new product coming out all the time that catches their attention.

“At the core of their business is churn,” one industry insider said, noting that there are always subscribers who drop Netflix after a free trial period or a month or two later, and the goal is to get more people to sign up, which comes mostly thanks to hot new series everyone is talking about.

As an asset, having 30 episodes of a series (three seasons) is considered enough to satisfy viewers discovering the show. Tacking on more episodes does not add significant value, I hear. “A show doesn’t serve a purpose [anymore],” an observer said. “There is no reason for the network to continue to invest in it.”

Marvel

That is why so many Netflix series are being outright canceled versus the streamer employing the oldest trick in every network’s bag: trying to renegotiate the terms of its deals. I have heard of instances when Netflix has sought reduction of previously agreed-upon fees and bonuses based on a series’ performance. For example, there was some back-and-forth between Netflix and Marvel TV, including the network requesting a season-order trim from 13 to 10 episodes, before the streaming giant pulled the plug on all Marvel series that it had picked up years ago at a very high price. (There were creative issues on some shows as well.) The first Marvel series were a big draw as they were among the handful of original series on the service. Two or three seasons in, the shows didn’t get the same attention because of the huge volume of new products. Netflix has built an adequate Marvel library, which will live on the service, while the Internet company cut a major expense by canceling the superhero series to invest in new fare.

Additionally, like traditional networks in the era of vertical integration, Netflix has been ramping up in-house production, redirecting funds from outside productions to in-house series — including shows from its roster of A-list talent under rich overall deals such as Shonda Rhimes, Ryan Murphy, Kenya Barris and Shawn Levy — and thus avoiding the cost-plus surcharge it has to pay to shows from other studios.

The shorter runs are something that’s spreading to other platforms, where shows also are ending relatively quickly. Amazon recently announced the upcoming fourth season of its flagship drama The Man in the High Castle will be its last. Only two original series on Amazon or Hulu — Amazon’s Transparent, which put that service on the map, and Bosch — have gone beyond four seasons, with the majority of shows canceled after two or three seasons. Industry observers see the trend also carrying over to premium networks, which now have a dual play as linear and SVOD outlets.

“Fifty is the new 100,” an industry insider said, referring to the traditional milestone of 100 episodes that used to kick off a financial windfall for studios and profit participants from syndication and other off-network sales. It now is considered unattainable, especially on digital platforms, with 50 episodes pretty much the most you can get there.

Added another source, “They are proving that they are not in the back-end business.”