6:57am PT by Tim Goodman
Critic's Notebook: Real Cracks in the Netflix Facade or Just a Bad Week?
The streaming giant and TV game-changer Netflix has always been a fascinating study if you follow the industry. From the no-ratings-information-supplied stance that annoys competitors to its insane budget for content (reaching $6 billion in 2017), knowing what's going on inside of Netflix or even finding a tea leaf or three to read on its strategy remains an interesting pursuit.
A series of recent moves have been illuminating, though it's still pretty difficult to say with any confidence that trends are emerging. Yet, when Netflix canceled Baz Luhrmann's The Get Down on May 24 and then Sense8 on Thursday — two of its most expensive series — it was the first sign that the platform appeared to care about its wallet. The latter cancellation came one day after Netflix founder and CEO Reed Hastings told CNBC that the streamer should have a higher cancellation rate because that would indicate that it was taking more and riskier chances on the programming side.
Which is, well, interesting.
For starters, there arguably hasn't been a bigger swing at Netflix than Sense8, a complicated genre series that demanded to be shot on multiple continents worldwide. It was both conceptually difficult to pitch and super-expensive — a double-whammy that left no other outlets standing and seemed, at the time, to be perfect for Netflix because of its vaunted deep pockets and interest in international sales. The Get Down was ultimately more of a financial and creative mess than a broadly ambitious swing from the content side (meaning it probably could have been done cheaper and better).
But Hastings' comments to CNBC could be construed as an interest in bolder, smaller and less expensive offerings as well (in comparison to the two recently canceled series). He cited 13 Reasons Why as an example of a series that "is a big hit for us" (again, no numbers) and a show that "surprised" Netflix because it had no idea the series would catch on. That shock was probably similar to the Stranger Things and Making a Murderer phenomena — two shows that Hastings didn't cite because, well, he was being mostly extemporaneous in his comments and Netflix makes so many series it's hard to remember them all.
But any trend-spotting based on his interview doesn't connect a lot of dots because later Hastings says the future trend for the company "is going big-budget, for sure, because as we get a bigger distribution, we can afford more spectacular entertainment."
Both The Get Down and Sense8 were big-budget, spectacular entertainment on at least some level, which brings matters of their cancellation back to what we'd have to guess were low ratings — always a dubious assumption for subscription-based content providers (including HBO, Showtime and Starz on the cable end). But the fact is that ratings do matter, even if you have the deepest of pockets. Hastings said judging a show is "a mix" between the ratings it gets and the number of subscribers. He did say this, though: "Mostly it's how many people watch it," before adding "those two are very connected."
OK, so Netflix does look at ratings as a factor of renewal, which is neither astonishing nor disingenuous. If not enough people were watching The Get Down to justify its pricey existence (which ended after only one season, a real rarity at Netflix) and the same applies to Sense8, then we can at least lay to rest the idea that money is no object to Netflix. Money is no object if whatever Netflix spends it on ends up meeting whatever mysterious metrics shape the Netflix business model. It definitely matters if the streamer throws piles at a series and the series fails under the previously mentioned mysterious metrics. One of them being — as we now know — how many people actually watch.
In short, Netflix still has gobs of money but it doesn't want that money to turn into dumb money. And, more important, it doesn't like or want a trend of dumb money — tossed over and over again at shows that don't pan out. In this analysis, we're getting somewhere based on the two most recent cancellations. Looking at ratings and at production costs makes Netflix seem relatable to other content providers in ways it may never have been before, as its legend grew.
We have hit a place in time where Netflix has very publicly pulled the plug on two shows in a matter of days, which also comes on the heels of "expiring" series like Bloodline and the reclaimed Longmire.
But this isn't a column about Netflix being in trouble, because it's clearly not. This is a column about Netflix in the sense of looking at new intel and thinking, "Oooh, that's interesting."
Because up until now, the motivations and machinations of Netflix couldn't really be understood. And that seems to annoy people. The streamer could make the super-expensive and creatively dubious Marco Polo and then cancel it after two seasons to a chorus of, "See, Netflix doesn't have the Midas touch. Not everything works." But even Marco Polo was a defensible, smart idea — make a drama with an international cast and see if it plays to a worldwide audience as only the globally curious Netflix can.
The answer on Marco Polo came back as a no. But that doesn't mean it wasn't worth a shot. And since then Netflix has become, like a learning monkey, smarter about its international content. Not releasing ratings is also smart. If HBO, Showtime and Starz could turn back the clock and institute the same policy, I'd bet they would. Why get beat up over low ratings when ratings aren't your business model? And yes, I fully understand the annoyance people feel (myself included) when Netflix tries to have it both ways by stating it has a huge hit without providing evidence. But the don't-tell method is precisely what it should be doing.
What the cancellations of The Get Down and Sense8 do, however, is at least open up the streamer to be questioned about its philosophy. John Landgraf of FX, who was just named THR's TV Executive of the Year, and who regularly and eloquently dives into issues of the industry, took several shots at Netflix while illuminating how the FX brand works (I've frequently said that FX is the best curated cable channel on television). Two swipes in particular toward Netflix came about the streamer throwing money at comedians for stand-up specials and doing the same for documentaries.
"Would we like to be in the documentary business? Yeah. We watch a lot of documentaries. I think it's a format that's at a superb place. But right now, Netflix is just shoveling money at it like shoveling coal into a boiler."
Like many other execs, Landgraf is partly jealous and partly annoyed by those deep Netflix pockets, but he's not wrong about both the stand-up realm and the doc field. Could Netflix be vulnerable to overspending on projects that won't pan out? Absolutely. But comedy specials are in the wheelhouse of what Netflix is looking for — multiple play opportunities. People like to watch over and over. Documentaries might be a more vulnerable space, given that the topic has to be exactly right and timely and saturation is an issue. But at this point, Netflix is probably feeling good about dominating those categories, price tag be damned.
Yet, here's where I think things could potentially get troubling for Netflix: Its philosophy is to have a deep bench — lots of shows give value to subscribers, theoretically. Being able to have a global presence gives Netflix a financial advantage and that money is then turned into content, but too much content is also a problem. It overwhelms subscribers. It doesn't allow Netflix to create advertising or PR campaigns around every show. If shows are getting lost in the shuffle and creators don't feel like their work is able to stand out or they aren't being nurtured (also a problem for Amazon), eventually creators will seek other outlets.
In his THR interview, Landgraf seized on this difference — because of course he would, since it benefits his position:
"If you look at the difference between what Netflix is doing right now and what we're doing, we're spearfishing and they're drift-net fishing," he says, pointedly. "They're scooping every organism off the bottom of the ocean. And they're keeping them all now, but reason would say, at some point you keep the bluefin tuna and throw the others back."
And while Netflix doesn't throw back a lot of fish — the fact that it did twice this week is exactly why it's weird — its customers getting lost in the supermarket might be a troubling issue that Netflix will have to deal with. The streaming giant's lack of curatorial care, as compared to FX, can be seen elsewhere in dubious decisions that make you wonder if more is really more: the consensus is there's zero creative reason to have a second season of 13 Reasons Why. But when you're really big and the goal is to be broad-based (Netflix has always been, as it grew rapidly, the closest thing out there to an old-school broadcaster) then getting hung up on qualitative arguments is pointless.
I'm sure Netflix would like more Emmys — nominations and wins. Everybody likes buzz-worthy accolades, especially if it drives the member base. But I also think Netflix is perfectly fine renewing fan-favorites or resuscitating nostalgia properties simply if it leads to a feeling that it has everything you'd ever want and you should sign up.
Right now it's hard to question Netflix's operating philosophy. It hasn't suffered notable downturns. Its future looks as bright and expansive as ever. Hastings told CNBC that the budget would have to grow "a lot" in coming years because of streaming competitors (though he believes more streamers are good for business and doesn't necessarily believe in "subscription fatigue"). He seemed as cogent, upbeat and zen as always.
Hastings gave credit, as he should, to Ted Sarandos, the man making the creative content decisions inside Netflix and one of the smartest and savviest execs out there. Sarandos has not only been right — from the start — about how Netflix would thrive and change the industry, he's almost preternaturally calm about criticism from competitors. He's not easily rattled and, honestly, why would he be?
It's foolish to think there won't be rough patches or even, at some point, setbacks, at Netflix. Canceling The Get Down and Sense8 raised some eyebrows and maybe gave its competitors a tiny bit of joy realizing there are cracks in the perfect facade, and it's not all unicorn and rainbows inside the new Death Star. Maybe that's true. It's fun to speculate (well, maybe not for Netflix).
But we're still a long way from finding something definitely problematic. You can return to binging.