Netflix's cancelation rule is now the streaming service's biggest problem. Netflix traditionally dominates the entire streaming industry. But that dominance is increasingly being challenged in the so-called "Streaming Wars." While it's true Netflix still has the highest market share, competitors like Disney+ are growing at an astronomical rate. Disney+ is depending on major brands such as Marvel and Star Wars to continue drawing in subscribers.
Netflix has a reputation for original series that command attention. This is, after all, the home of shows like Stranger Things, The Crown, Bridgerton, and The Umbrella Academy - shows that launched to popular and critical acclaim, and that have firmly established their place in popular culture. For all that's the case, though, the streaming giant is also well known for its tendency to cancel shows that rivals would have been proud of. One recent example was Rachel Shukert's The Baby-Sitters Club, an award-winning series that - like so many other Netflix Originals - was canceled after just two or three seasons.
Netflix is, at heart, a data-driven company. Unfortunately, the data that drives the company's decision-making processes is most certainly commercially sensitive, and as a result, most viewers will never know why their favorite show has just been pulled. Even more surprisingly, showrunners won't really know either, as Shukert admitted in a recent interview with Vulture. And this secrecy is becoming a major issue.
Why Netflix Cancels Shows So Often
It's first important to understand that Netflix don't operate like a traditional network. As Netflix's Global Head of TV Bela Bajaria explained in an interview with Deadline, networks traditionally order pilot episodes - and then cancel a lot of shows at the pilot stage, before viewers get to even see any footage. "We order straight to series in the first rather than make pilots," Bajaria pointed out, "which results sometimes in more season one cancellations. Even with that, I still believe a season order is still a better creative expression of a writer’s idea so I still think that’s the right model for us." This perhaps explains why a surprising number of critically-acclaimed shows don't make it past one season, including the likes of I Am Not Okay With This, Teenage Bounty Hunters and Cursed; Netflix even blocked I Am Not Okay With This from getting a proper ending with reshoots, unwilling to pay for the end of season 1 to be changed.
Netflix seem to evaluate a show's performance based on some kind of formula, which balances viewership against the cost of the renewal process. This isn't a simple calculation; writing to the U.K.'s House of Lords Communications and Digital Select Committee, Netflix revealed they assess three different types of viewers:
- Starters are households that watch just one episode of a series within the first 7 days
- Completers are subscribers who finish an entire season within the first 7 days
- Watchers are the number of subscribers who complete the show within its first 28 days
But costs tend to increase with renewal. Deviating from standard network models, Netflix tries to appeal to producers by giving bonuses and pay bumps as a series continues. Speaking to Wired, data analyst Tom Harrington, from Enders Analysis, suggested this is a major reason Netflix shows are often pulled after two seasons. "They have to give [a show] more money per series, and if they decide to recommission it, it becomes more expensive for them to make," he explained. "Because of that, so many more shows are canceled after two series because it costs them more." The situation became even more complicated when production was disrupted by the coronavirus pandemic, with costs increasing because Netflix had to pay actors to wait for production to be able to begin again. Jonathan Entwistle, showrunner of I Am Not Okay With This, believes that is a major reason the plug was pulled on his show, and it's likely there were other cases where this happened too.
Netflix's Secrecy Is A Major Problem
Unfortunately, Netflix's secrecy is becoming a major problem - not least because the showrunners themselves don't see the metrics they need to really understand how their shows are performing. "Our numbers seemed fine," Shukert recalled as she discussed the cancelation of The Baby Sitters Club. "It was what they expected. It was pretty close to what we did last season, so I wasn’t too worried. Then, as the decision to renew the show kept dragging on, I started to get concerned." In her view, the metrics for The Baby Sitters Club in isolation didn't give her any real sense of how her show was performing; she believes the issue was that they had the misfortune of coming out around the same time as Squid Game, which meant the context was different. "When you only have your numbers in a vacuum and you don’t know the numbers of anything else, you don’t know what you’re trying to hit," she explained. "You don’t know what numbers other comparable shows are hitting. Netflix will give you context in terms of what your numbers were last season or what they were hoping for, but even that is very vague. You’re flying a little blind."
That's a common theme among showrunners discussing cancelations. Many seem to feel the goalposts are always moving - and, worse still, that they have no idea how they've been moved, because the changed expectations are based on variables that are never disclosed to them. It's particularly disturbing hearing Shukert express confusion about Netflix's metrics, and what they consider to be a success or a failure; she's worked with the streaming giant since 2016, so if she's confused, most other creators probably are as well.
Netflix's Algorithm Just Doesn't Work For Everything
Meanwhile, there are occasions where Netflix's algorithms are a little too sophisticated. These algorithms divide viewers into over 2,000 so-called "taste communities," and each person gets individual recommendations based on these allocations, with the algorithm improving with every show a viewer watches. The problem is, though, that there are cases where the algorithm is going by incomplete data. The Baby Sitters Club is based on a series of books by Ann M. Martin, published between 1986 and 2000. That means the show has tremendous potential to appeal to nostalgia - but the algorithm has no way of tapping into that. It has no way of knowing whether an individual viewer, who doesn't generally watch young adult fiction, would smile fondly when they saw the show's name because it reminded them of their childhood and they wanted to share that experience with their own children. Because Netflix generally depends on this algorithm rather than upon marketing, potential audiences may never even know the show exists.
Making matters worse, anecdotally there are countless cases of people not being recommended a second season - even though they'd watched the first. "I heard from so many people who loved season one that they didn’t even know season two had come out," Shukert reflected. "How is that possible? How does the algorithm not know that you watched and loved the entire first season and then immediately show season two to you? Why is this not getting in front of people that want to watch it?" Part of the problem may well be with the nature of the algorithm itself; Shukert seems to imply she believes viewers tended to watch The Baby Sitters Club gradually rather than binge it, and the algorithm recommends shows that are more binge-able first and foremost.
Shukert's comments hint at a greater truth that threatens to undermine Netflix's success. The data-driven approach is the key to Netflix's dominance, but the streaming giant has become overly dependent upon its algorithms. In functional terms, these algorithms mean everything on Netflix is essentially competing with everything else on the platform. It's quite possible that, at the time The Baby Sitters Club season 2 came out, the algorithm simply had other priorities for the relevant taste communities. It prioritized something else, and as a result not enough people even realized The Baby Sitters Club season 2 had ever released. "A lot of times, Netflix things come out and for whatever reason, if the algorithm doesn’t put it in front of you, no one knows it’s on," Shukert admitted. She isn't the first to reflect on this problem; Netflix didn't even recommend Tuca & Bertie to the show's own creator. This kind of problem could clearly happen to anyone.
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The Streaming Wars are becoming increasingly competitive. While it's true no company is choosing to make all their metrics available, understandably considering them commercially sensitive, it's nonetheless clear other streaming services are avoiding Netflix's data-driven approach. In fact, Netflix's rivals often seem to be eschewing the binge model itself, releasing episodes weekly instead of dropping them all at once; this has the benefit of driving engagement and repeat viewership, introducing very different metrics. These approaches may well prove to be a major draw for talent, simply because showrunners and producers can understand the decisions being made a little better, and they can also be confident their shows will be marketed - meaning they'll have better potential to perform in the first place. Netflix's data-driven focus has been its strength up till now, but it is becoming a major weakness.