12 December 2018

Vulture: “The Netflix Binge Factory”

Mysterious though it may seem, Netflix operates by a simple logic, long understood by such tech behemoths as Facebook and Amazon: Growth begets more growth begets more growth. When Netflix adds more content, it lures new subscribers and gets existing ones to watch more hours of Netflix. As they spend more time watching, the company can collect more data on their viewing habits, allowing it to refine its bets about future programming. “More shows, more watching; more watching, more subs; more subs, more revenue; more revenue, more content,” explains Ted Sarandos, Netflix’s chief content officer. So far, it’s worked spectacularly well: Netflix has gone from around 33 million global subscribers before House of Cards premiered to over 125 million today. Wall Street analysts have predicted Netflix could flirt with 200 million subscribers by the end of 2020; by 2028, one Morgan Stanley analyst has said, 300 million is possible. “The thing that keeps me up at night is scale,” says Sarandos. “It’s a mind-boggling amount of programming that’s being produced here. How do we keep scaling it?”

One answer is cultural. “I’m building a team that’s oriented as saying ‘Yes’ in a town that’s built to say ‘No’,” Sarandos says. That’s not just New Age–speak. It’s practical. To stimulate volume, Sarandos and Holland have put in place an extraordinarily decentralized development and production pipeline, one that allows Netflix to operate like ten or 15 semi-independent entertainment companies — whose output all happens to be distributed by a single service.

Josef Adalian

Fascinating inside look at Netflix, from their culture to the metrics used internally to decide whether a particular show is successful or not.

It turns out that for Netflix, having too many subscribers turn a show off midway through an episode and never return, or watch a couple episodes and then bail, might be just as bad, or maybe even worse, than not having a big audience, period. Sarandos later gives a name to this metric: survivorship, or “Did people who started watching episode one keep watching?” In the case of Sucks, “not a lot of people did.”

Netflix doesn’t necessarily care if you binge-watch an entire season of a show within a couple days of it launching. “We’re not trying to encourage that”, Sarandos says. “The completion of a single episode is a more important trigger. We wouldn’t be looking at, ‘Are people plowing through it in the first weekend?’, because the number of people who do that is pretty slim.” But one metric I heard repeatedly during my visits to Netflix was 28-day viewership — basically how many people completed a full season of a show within the first four weeks it’s on the service. Sarandos also tells me the company looks at which shows new subscribers watch first: It lets them know if a show is driving people to sign up for Netflix.

While I regularly watch shows on Netflix and quite enjoy their ‘binge’-mode of releasing full seasons at once, I’m not convinced their methods are significantly better than those of traditional TV producers. It’s a personal observation, but it feels like most of the series I watch from start to finish on Netflix are not actually Netflix originals, but licensed content – and it gets more complicated when taking into account international distribution (for example Star Trek: Discovery is marketed as Netflix Original outside of the US, even though it’s produced by CBS). Many of their so-called ‘originals’ are in fact reboots of previous shows, serializations of movie hits, animated series based on movies or live-action versions of animated series – in short, not exactly what you would call original ideas.

Robin Wright and director Alik Sakharov on the set of House of Cards, season six
Robin Wright and director Alik Sakharov on the “Kevin-free” set of House of Cards, season six. Photo: David Giesbrecht/Netflix

Despite a growing number of subscribers, significant hits have been few and far between (although their model of letting people watch at their own pace may make it harder to generate popular impact compared to traditional shows released once a week); their first success story, House of Cards, recently wrapped up its sixth and final season, after a disappointing decline in quality. Netflix also faces increasing competition from multiple companies in the US, who are launching rival streaming subscriptions. The biggest rival will likely be Disney, who already caused Netflix to start cancelling the Marvel series produced in collaboration, despite some of them having good reviews and solid viewership.

The philosophy of constantly saying ‘Yes’ to new projects can easily lead to flooding the market with mediocre shows, while at the same time failing to recognize quality content. The perfect example that annoyed me recently was how they handled Altered Carbon, a fantastic show that barely made the cut for renewal (or at least so it was rumored) because the positively infantile Lost in Space had better audience immediately after launch. I don’t think Netflix will be able to afford throwing money around indiscriminately for much longer – especially money it doesn’t have.

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