Why Netflix Canceled Your Favorite Show
To All the Series You've Loved Before
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I spent the weekend moving out of my apartment, so this special Monday edition will be short and to the point. Next week & beyond, I’ll be back to more in-depth analyses and pull in some interesting news stories to talk about. For now, though, here’s why Netflix keeps canceling your favorite shows, but also why they’re saving the romcom.
Show Business
The core of Netflix’s business is getting users to pay a monthly fee. This is fundamentally different than the standard theater/broadcast models where movies and TV made money by getting lots of people to watch–whether that money came from ticket sales or ads. In Netflix’s model, they can make their money even if nobody watches anything. They just need to convince users that it’s worth paying the subscription fee for the next month.
To be clear, content is still critical. It is the fundamental thing Netflix provides to users. That change in business model, though, changes the way Netflix thinks about the value of content. Their business is not about the performance of an individual piece of content, but rather how it contributes to the Netflix stew.
Cancel Culture
Let’s say Netflix has a big chunk of change to spend on a show. Their decision now is whether to fund a second season of a small-but-fervent band of fans’ favorite teen drama or to fund a new show.
If Netflix funds that third season, the fans of the show are happy, but no one else cares very much. In fact, show audiences generally tend to diminish over the seasons. At the same time, shows get more expensive as seasons go on. If Netflix cancels that show, fans will be disappointed, but not so much that they’ll cancel their subscription en masse. To renew that show, the costs are high and the benefits are low. [1]
With a new show, Netflix gets another crack at creating a big hit. For current subscribers, they may get a new favorite show. Even if they’re not interested, seeing that new show on the platform reinforces that Netflix is constantly releasing new content, and they’ll probably drop something they really like soon. For potential subscribers, a highly visible hit like Stranger Things can drive new sign ups. In a subscription view of the world, there’s a much stronger argument to take new swings with content.
Of course, there are risks to this strategy. Shows that could have been a huge hit with more time get cut off before they can break out. Viewers may become reluctant to get invested in a Netflix show if they suspect it’ll disappear soon. Creators may avoid selling to Netflix if they expect that a long-running, more lucrative show is unlikely.
RomDotCom
In recent years, romcoms have been less common at the box office. There are lots of proposed explanations, but a big one is that getting audiences to theaters is harder than ever [2] due to factors like audience fragmentation, competition from streaming services, and the rise in TV quality. If a movie in theaters makes money by putting butts in seats, the focus is going to be on the movies that can do that reliably, e.g., superheroes movies.
Netflix seems to put out a new romcom on a weekly basis, though. One reason they work there is the product: Romcoms are generally good but not great, and on Netflix, the bar to watch is lower. The content is free, it’s easy to start watching, and it’s easy to bail if it’s not worth it, so there’s more space to try things.
There’s also a strategic element, though, that encourages Netflix to invest in them. Netflix’s focus on subscribers means they need to provide for a wide range of user types–romcom lovers, true crime junkies, stand-up comedy fans–which means a greater focus on the overall ecosystem of content. In many cases, it’s more important to fill genre gaps for all these users than take a big swing at a tentpole. [3]
Wrap It Up
Content strategy is a huge part of streaming platforms’ operations, and there’s a lot more to be said about it. The strategy & business model of a platform change the content it invests in, and interesting dynamics like these emerge, which affects the kind of content you have available to watch. [4]
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[1] These same cost increases apply to linear TV, but the benefit of a show that still has some audience is higher and there’s more friction to slotting a new program into the schedule.
[2] Pre-Coronavirus, of course. Now it’s literally impossible in many places.
[3] Remember Bright?
[4] Of course, these are super quick takes and I’ve cut a lot of interesting related points here. For instance, every once in a while, one of these romcoms is a Kissing Booth or To All The Boys I’ve Loved Before breakout. Netflix’s platform model makes it easier to build a stable business on top of the chaos & unpredictability of individual pieces of content. As always, a topic for a future issue.
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