- Like a third season of a Netflix show.
- There's a good chance that one
of your favorite shows on Netflix is already canceled.
Netflix is facing a series
of issues that they didn't face even five years ago.
They've got looming competition
from some of the biggest players in entertainment today.
They also just announced that they lost
subscribers in the United States
for the first time in nearly a decade.
And because of all this Netflix
has to do something that it really didn't have to
up until now, start acting like a cable network
and cancel shows.
Remember when Netflix was like super exciting?
Every show that came out felt like a blockbuster release
because everything about it felt really cool and unique.
Netflix came in
and essentially Beyonced the heck,
can I say hell?
Beyonced the hell out of TV
by dropping entire seasons at once.
This is something that only
a network on the internet could do, no one else could.
By 2015, Netflix was like this hotbed for creators.
Everyone wanted to work with them
'cause Netflix was doing some cool things.
- Orange is the New Black.
- Orange is the New Black, House of Cards,
and even Unbreakable Kimmy Schmidt
were being nominated for
and winning Emmy's.
The company's content budget grew every single year,
which let them take chances
on weirder projects.
The Wachowski sisters, best known for The Matrix,
had a Sci-Fi series,
which reportedly cost Netflix nearly nine million dollars
an episode.
That's on par with some of Game of Thrones episodes.
Netflix had one major advantage,
it was the only player in the game.
Most importantly, if Netflix was winning Emmy's,
it proved to everyone,
including major networks with ABC and CBS,
and also prestige networks like HBO,
that internet TV was actually a thing
people should pay attention to.
But that's simply not good enough anymore.
By 2020, Netflix is gonna have major competition
from some of the biggest companies in the world.
Apple, Disney, Comcast, NBC Universal,
and AT&T's Warner Media are all
launching streaming services.
And in order for them to compete with Netflix,
they're removing their own content from Netflix,
meaning if you wanna watch Friends,
you have to go to HBO Max,
Warner Media's streaming service,
in order to do it.
- I can't even begin to explain to you
how much I am gonna miss you.
- With less licensed shows,
Netflix has to invest in more original content
in order to keep subscribers.
Netflix relies on something called the efficiency metric.
Basically, Netflix puts more
of an emphasis on shows
that can bring in new subscribers
or keep those who are at risk of canceling.
That makes it harder to justify renewing a series.
How many people are gonna subscribe to Netflix
for a third season of the OA
if not many people watched the first two seasons?
The way executives see it
that money would probably be better spent on a new series,
particularly in an emerging market
that's not the United States.
Basically, the United States is over saturated.
Everyone in the U.S. who's going to have Netflix
probably already does.
But there are huge markets in East Asia
or South America that are clamoring
to sign up for the service.
That might explain why you're also
seeing more Bollywood films
or South American soap operas on your service.
But Netflix's investment in other series
doesn't stop fans from hurting
when their favorite show gets canceled.
Take Tuca & Bertie.
That show is critically adored
and had a dedicated fan base,
but unfortunately it just wasn't big enough.
Creator Lisa Hanawalt even tweeted
that it just didn't have the sizeable
viewership it needed for Netflix to renew it.
What's interesting and unique to Netflix
is that Hanawalt blamed the algorhithim.
It's unclear just how many people
were actually served the show on their homepage.
Unlike traditional cable,
which slots shows into one specific spot every week,
Netflix is more like YouTube.
There are so many shows, movies
and specials that Netflix relies
on a recommendation algorhithim
to try and pair viewers with things they'd be interest in.
It doesn't always work.
It's not like Netflix isn't interested
in investing in creators or original shows,
it's just about to get much more focused.
The company's investing hundreds
of millions of dollars into specific creators
that they think can deliver guaranteed hits.
You've got David Benioff
and D. B. Weiss,
who created Game of Thrones,
coming to Netflix for $250 million.
Ryan Murphy, the creator
of American Horror Story,
he's coming over for $300 million.
And Shonda Rimes,
the creator of Grey's Anatomy,
one of my favorite shows,
is coming over for $150 million.
So it's not all bad news.
Netflix still needs new shows
and is clearly still willing to pay for them.
There's a good chance that weird niche TV
is still going to wind up on Netflix,
it's just that based on everything
we're reading and seeing,
it's likely that it's gonna come
from someone like J.J. Abrams.
There are still shows that can make the case for renewal
past the third season,
but those are increasingly becoming
the exception to the rule.
One of those shows is Stranger Things,
which third season saw more than 40 million
people watch it in just four days.