Free from the constraints of the traditional television model, with weekly episodes and the ever-unchanging schedules of the spring and fall season, Netflix has managed to revolutionize the way we watch entertainment in the space of a few short years. It’s almost hard to believe that only five years ago, many had already written off the service’s American reboot of House of Cards as a flop waiting to happen. Now, 146 awards later (including Emmys, Golden Globes and Peabody awards), Netflix's original programming is available to view in dozens of countries, attracts A-List talent, and has begun to dominate the industry. In 2016 alone, Netflix released over 120 original shows and movies, spending an estimated $6 billion a year to get there. In some areas, that’s paid off handsomely - such as the critical success of The Crown and the surprise popularity of Stranger Things. Yet it’s not all plain sailing, as Netflix has begun to cancel original shows at a rate faster than expected.
In the space of one month, the streaming service has cancelled The Get Down, the Baz Luhrmann-fronted musical drama about the rise of hip-hop in New York, the Wachowski sisters’ genre-bending sci-fi series Sense8 (though the show will get a two-hour special to wrap things up), and the comedy Girlboss, based on the memoir of Nasty Gal founder Sophia Amoruso. To put this in perspective, from 2013 – 2017, Netflix only canceled five series, including Marco Polo and Hemlock Grove.
Some of these recent cancellations weren’t necessarily a surprise – The Get Down in particular was subject to delays and wildly over-running costs (said to be over $120m for 12 episodes), never quite reaching the levels of critical and commercial buzz needed to keep it alive – but Netflix has defined itself so clearly as being unlike the traditional TV system because of that mythic quality wherein the pockets ran deep and no expense would be spared. Spending $100m on a series (as was the rumored budget for The Crown) was deemed the norm, and helped the service stand out in the Peak TV era as the traditional and cable networks worked to adapt for audiences whose viewing habits had changed to suit the binge-watch model. When you spend a lot of time, money and industry clout defining yourself as the anti-network, what happens when you have to start making tough decisions like one, and how do you even get to that place after such an apparently invincible run?
In an interview with The Economist, Netflix CEO and co-founder Reed Hastings mused, in relation to competitors like HBO spending an average $10m on an episode of Game of Thrones, "What does $20 million-an-hour television look like?" That’s obviously an impressive number to throw around, but this recent bout of cancelations suggests that Netflix is now being forced to deal with the very real economics of producing original shows and justifying that cost with a subscriber-focused business model.
It's no surprise that making TV is expensive, but when you couple that with consistently high budgets and a non-traditional release schedule that has new shows out every couple of weeks, it's not hard to see why executives may be panicking about their investments. With the typical network model, be it cable or otherwise, smaller shows can scrape out a long life if the audience is dedicated enough, the demographics right for prime advertising revenue, and international interest high enough. With Netflix, everything is in-house, and the company doesn’t tend to let outsiders know how well a show is doing with viewers, so we are left to speculate. Netflix also doesn’t do adverts, although there has been recent talk of introducing pre-roll adverts to the service. Recent subscriber numbers haven’t been encouraging either, as membership growth isn’t steady enough to justify the array of nine-figure blockbuster series.
When Netflix started its original content model, it wasn't the only streaming service in town, but the competition was limited to Amazon Prime and Hulu. Now, viewers are turning to other sources and no longer see Netflix as the default mode. More options are available - like HBO Now, Starz and Showtime's own services - and both Amazon and Hulu have majorly upped their game in terms of original shows. These services stand out from the crowd with their own original content and exclusive access to shows and films unavailable elsewhere.
Netflix has also begun to shift its ambitions to the world of original movies, which had previously been an afterthought compared to their TV shows. Following a successful run at this year’s Cannes Film Festival, where Netflix had two films in competition, the streaming service is eagerly trying to play in the big leagues with the major and independent studios. Generally, Netflix's films have been significantly more modestly-budgeted than the service's original TV series, and that could signal a more investment friendly direction for the company, but it would rely on content interesting enough to bring on those coveted new subscribers. Paying a rumored $150m for new Martin Scorsese film The Irishman certainly sent waves around the industry, but will it pay off in the form of those much-needed sign-ups? Some of Netflix's most costly projects don’t seem to be capturing the needed buzz. Brad Pitt was allegedly paid $20m to star in War Machine, but it sank without a trace once it premiered on Netflix.
While the traditional model of television is shifting, there's something to be said about the reliability of the old ways. Once upon a time, HBO revolutionized TV in the same way Netflix has, but the power still lies in that perceived prestige. It means something to be a show on HBO, even if the quality isn't as good as the network's most beloved shows like The Sopranos and Game of Thrones. HBO isn’t immune to the realities of the industry’s economics either – just look at the much-hyped Vinyl being canceled after one season, despite originally being renewed, and the supposed cost of that leading to some high-profile projects being shelved – but there’s a reliability to the brand.
There are a number of options available for Netflix to help ease these worries beyond canceling their shows. The possibility of a price increase for subscribers has been floated around for a while, but that runs the risk of putting off current users, who might just go elsewhere. The service's ambitions are lofty and that requires investment, but with the focus landing on that which guarantees them viewers as well as a happy dose of critical acclaim, it seems that Netflix are keen to streamline their efforts for maximum efficiency. What that means for your favourite show, we may not know for a while. For now, Netflix is past the honeymoon period and must deal with the reality of being in the entertainment business.