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Netflix needs to grow, but it’s sacrificing great original series to do so

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Everything is changing

Only five years ago, Netflix seemed like it was rewriting the rules of television, making huge deals for bold projects that would have been unthinkable on network TV — BoJack Horseman, What/If, and The Order are just a few examples. Creators were lining up to work with the company, which promised a laxer working environment and a place to experiment. The first major streaming service was making a name for itself as a safe haven for serious, ambitious television.

In 2019, that haven looks a lot less safe. Recently canceled shows like Tuca & Bertie and The OA have spurred a conversation about whether shows are getting a fair chance at finding an audience. Tuca & Bertie showrunner Lisa Hanawalt called out Netflix’s algorithm as being a big part of the issue her show faced and how it played into the series’s cancellation.

“Considering how rare it is for women to get showrunner opportunities, particularly in the animated realm, it stings even more to see Tuca & Bertie get the cut before it really got a chance to find an audience,” Vulture’s Jen Chaney wrote. “The fact that Tuca & Bertie got canceled less than three months after it showed up? That just makes no sense at all.”

Even relatively successful series are often canceled after two or three seasons with little to no fanfare, a fate that’s befallen Hemlock Grove, Seven Seconds, The Get Down, Everything Sucks, Lady Dynamite, and Girlboss. Traditional network showrunners can check Nielsen ratings to know how many people are tuning in. But Netflix keeps that data much more closely guarded, leaving many creators in the dark about their show’s future.

Netflix’s hesitance to continue operating at its former speed was reflected in its most recent earnings. The company lost subscribers in the United States for the first time in more than a decade, and it blamed the loss on a lack of substantial releases and a recent price hike for subscribers. CEO Reed Hastings acknowledged in a call with investors that without the presence of a Stranger Things, it was harder for Netflix to bring in new subscribers. That, coupled with looming launches of streaming services like Disney+ (which will bundle with ESPN+ and ad-supported Hulu for the same price as a Netflix subscription) concerned investors.

“We’re coming out of the golden age of streaming where Netflix had no reasonable competition. That could have a catastrophic effect on their skyrocketing growth,” says Eric Schiffer, the CEO of consultancy firm Patriarch Organization and a streaming analyst. Now, that golden age is over, and Netflix is keeping content creators on a much shorter leash.

The company’s decision to give creators less room to prove their show can be a hit has a lot to do with how Netflix earns money. Netflix doesn’t earn ad revenue, and it can’t syndicate a show down the road like traditional networks (think Friends and Seinfeld still playing on TBS), so it doesn’t have the same incentive to order a sixth or seventh season that a network would. Retaining subscribers and bringing in new customers is the company’s number one mission, and that’s led to an internal metric that Netflix uses to decide whether a show should be renewed: “efficiency.” Netflix tends to place “more value on luring new subscribers or keeping those who seem in danger of canceling,” according to The Hollywood Reporter.

That makes it harder to justify renewing a series. How many new viewers will subscribe for a third season of The OA if they didn’t subscribe for the first two? As executives see it, that money might be better spent on an entirely new series, particularly in a less saturated international market. There are still shows that can make the case for renewal — like Stranger Things, which saw 40 million views in the first four days after its third season was released — but they are increasingly the exceptions to the rule.

“They have to play it much more conservatively and much more focused,” says Schiffer. “I think it’s smart.”

Netflix’s first generation of shows didn’t face as much pressure to perform. There weren’t many original series being made exclusively for streaming services. And because Netflix could stream popular licensed shows like Friends and The Office, the company didn’t have to worry as much about losing subscribers. As a result, some of Netflix’s earliest shows are also the network’s longest-running ones. Orange Is the New Black just celebrated its seventh season, and Unbreakable Kimmy Schmidt ended after its fourth season (but it’s getting an interactive movie). It was rare that Netflix canceled shows up until two years ago when the company axed beloved series Sense8 in 2017.

“A big expensive show for a huge audience is great,” Ted Sarandos, Netflix’s chief content officer, said in 2017 at a conference. “A big, expensive show for a tiny audience is hard even in our model to make that work very long.”

Sarandos’ point turned out to be truer than showrunners realized. Netflix is still taking big swings, but the company is betting on creators instead of original series. It’s hoping that notable writers, directors, and producers will bring in and retain an audience. Netflix proved through a recent $200 million deal with Game of Thrones creators David Benioff and D.B. Weiss that the company was willing to “battle against titans,” according to Schiffer.

“The ability to control the highest-quality producers will continue to be the future of streaming power,” Schiffer said. “They look at the right content creators as killing machines for maximizing subscriber growth. It’s less risky even though it’s more costly because there is a somewhat guaranteed audience. That’s sort of how Hollywood used to work.”

Before companies like Disney, WarnerMedia, NBCUniversal, and Apple decided they wanted to have their own streaming services, Netflix didn’t have to worry about competitors possibly stealing its subscribers. But now, “knives are out, looking to take a big portion of their market,” Schiffer says.

“Netflix is not dying. They’re not in existential crisis,” Schiffer says. “It’s just now they have some real competition.”