The giant streaming platform, Netflix has a record of multitudes of content with varying genres. Along with other popular content, the last seven years of Netflix can be characterized by churning out Originals. The first-ever Original that Netflix created was ‘House of Cards.’ Many shows, Originals or others, have had a very long and successful run like The Crown, Orange Is The New Black, Stranger Things, etc., However, some shows do not see the light of the day post two seasons. What is the reason?
The Data And Economics Play A Pivotal Role
Back in the day, there were certain television shows whose future seemed doomed but have become cult classics like The Office. The reason for that is that the show got a window to prove its merit with another season and the rest is history. But, with the advent of streaming platforms, the fabric of developing content has changed a lot. As per Ampere Analysis, on average, a Netflix Original will get the time of developing two seasons before canceling the run.
The episode of canceling the shows after two seasons began with the period drama Marco Polo. Due to the series, Netflix incurred a loss of $200 million. Amidst the fan rage about canceling Sense8, the fans got to see a finale. Ted Sarandos, Netflix’s Chief Content Officer while speaking about the Sense8 cancellation said, “They did a beautiful show. The audience was very passionate, but not large enough to support the economics of something that big, even on our platform.”
The following two examples tell us that the cancellation depends upon whether viewership will be in tandem with the cost of the renewal of a show. Though Netflix does not reveal viewership data, the renewal of any show depends upon viewership. This in turn decides whether the cost of renewal will be directly proportional to the viewership. Cindy Holland, Vice President of Original Programming at Netflix said, “The biggest thing that we look at is, are we getting enough viewership to justify the cost of the series?”
The renewal of the show cannot be determined by a particularly religious fan base. An ideal series for Netflix is where everyone is watching the show and not just a dedicated fan base. Like in the case of Stranger Things, where word-of-mouth helps to garner new members along with previous ones. This helps to garner more viewership which is the reason for its renewal now to Season 4.
The Three Metrics That Help Netflix To Either Renew Or Cancel A Show
As per a letter sent to the House of Lords Communications and Digital Select Committee, Netflix relies on three metrics. There are two data points. First, the seven days mark after a series is released. Second, the 28 days mark since its release. The three metrics are Starters, Completers, and Watchers. The Starters are the ones who watch one episode of the series. The Completers are who finish the season.
The last, Watchers are the cumulative subscribers who watch a show. The most important pointer for the renewal is the users who complete a series by the 28 days mark. All these pointers, collectively, decide whether a show is to be renewed or canceled. The Netflix model of revenue is characterized as a cost-plus model. The platform pays an additional commission of 30% on top of the production cost.
Netflix feeds the producers of TV shows with bonuses and other financial accolades as per the run of a series. Harrington explains that a show gets expensive post three seasons due to these premiums paid. He said, “They [Netflix] have to give [a show] more money per series, and if they decide to recommission it, it becomes more expensive for them to make. Because of that, so many more shows are canceled after two series because it costs them more.”
Netflix works on the model that if a show has not gained enough traction and viewers over two or three seasons, it will not gain any in the future. So, the 28-days mark is a very crucial point for Watchers and Completers so that, their favorite series will be up for renewal as the cost of renewal will be drawn due to traction. Harrington says, ” If a show hasn’t proven itself by series two, then why would you make any more of it?”
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