Netflix Became a Legitimate TV Network This Year. Now What?

Netflix's rise is reminiscent of...stay with me...Southwest Airlines. The industry outsider which ended up transforming the rules of its industry's business game and grew to become a, if not the, dominant player.

The challenge is, as Southwest found, that when you do achieve that goal, you discover that you are being judged by a different set of measures - and expectations. The question is what Netflix has to do to continue growing without losing its creative edge. JL

K.M. McFarland reports in Wired:

Over the past three years, the streaming company’s expansion has been relentless. Of course Netflix is opaque about numbers. Gaining awards nominations and watching subscriber numbers go up has helped its stock price—so why conform to ratings reports? Netflix is attempting to widen its audience without needing to capture a large swath of viewers with every show, just a devoted niche.
This year, Netflix finally crossed the threshold it had been building to since 2011: it became an honest-to-goodness television network.
When the streaming service first stepped into the realm of original content, acquiring the high-profile prestige series House of Cards over HBO and AMC, the development began in earnest—so by the time that flagship show debuted in February 2013, the network was already working on Hemlock Grove, the return of Arrested Development, and Orange is the New Black. In 2014, all the non-continuations got second seasons, and Netflix added animated comedy BoJack Horseman, international period drama Marco Polo, and the final season of The Killing.
But in 2015, Netflix’s original programming slate exploded. When Bill Burr’s animated sitcom F is for Family debuts next week, the streaming service will have launched 20 seasons of original content this year, ranging from its Marvel deal (Daredevil, Jessica Jones) and comedy revivals (Wet Hot American Summer: First Day of Camp, W/Bob and David) to Tina Fey’s Unbreakable Kimmy Schmidt and Aziz Ansari’s Master of None.
Add in the company’s nine original documentaries, 11 comedy specials, and 13 new and continuing children’s series, and it constitutes a programming portfolio
that dwarfs the offerings of Amazon and Hulu. Even at this point, that slate is more in line with a traditional broadcast or cable networks.

Further Expansion In 2016

Netflix’s original programming proliferation shows no signs of slowing down. Netflix Chief content officer Ted Sarandos¹ announced in a speech at the UBS Media Conference that the total number of original scripted shows would reach 31 in 2016. That will include Chelsea Handler’s docu-series Chelsea Does, Baz Luhrmann and Shawn Ryan’s musical drama The Get Down, Maria Bamford’s Lady Dynamite, Marvel’s Luke Cage, the Judd Apatow co-created Love, and international distribution of long-running Canadian teen drama Degrassi: Next Class. In addition, Netflix wants to stream a total of 30 kids’ shows and continue its investment in standup comedy specials and documentaries.

Click to Open Overlay Gallery

Netflix

And that’s without detailing the newest jewel in Netflix’s original content crown: film production. Cary Fukunaga’s Beasts of No Nation was acquired with deliberate awards-season goals, and that paid off: this week its star Idris Elba was nominated for Best Supporting Actor at the Golden Globes and SAG Awards. The Ridiculous Six, the first movie to come from Netflix’s four-picture deal with Adam Sandler, might be the highest-profile film of the coming weekend (in theaters, there’s only one wide release, In the Heart of the Sea). Next year’s Crouching Tiger, Hidden Dragon sequel, along with the news that Netflix will invest in a new film from Snowpiercer director Bong Joon-ho, signals that the streaming service isn’t simply competing in the series categories at the Emmys and Golden Globes—it’s going after HBO’s TV-movie territory and has the Oscars in its sights.
Over the past three years, the streaming company’s expansion has been relentless, racking up critical accolades and major awards nominations as well as causing industry prognosticators to speculate on how other networks—aside from HBO, which Netflix considers its chief rival—can keep up. But that progress hasn’t come without an array of varying detractors.

No Ratings, Big Problems

When Netflix was producing only a handful of shows, its refusal to report viewership numbers was merely an annoying quirk. Now that its original content production has expanded to this scale, though, the lack of numbers becomes more problematic, largely because it allows the service to make unverified claims about its shows’ performance. At an investor conference, Sarandos decried Nielsen data that claimed that a Netflix show this spring was the second most popular show on TV behind Game of Thrones. “We’re pleased to take the number two spot,” he said, “but think it’s number one because they don’t measure all the devices.” (And when Netflix does release data, it’s clearly designed to make the company look prescient, as when Sarandos announced that Beasts of No Nation had garnered three million views in North America after two weekends.)
The thing is, of course Netflix is opaque about numbers. Gaining awards nominations and watching subscriber numbers go up has helped its stock price—so why conform to ratings reports? But that lack of transparency has one added drawback: hurting the negotiating ability of creative talent. As Adam Pally (Happy Endings, The Mindy Project) brought up in an interview for Vulture, Netflix keeps its viewership numbers secret even from award-winning creators like Tina Fey. On one hand, that’s great; it insulates them from the pressure typically felt by broadcast television producers. But it also prevents creators—Pally specifically name-checked OINTB showrunner Jenji Kohan—from negotiating for a salary that’s commensurate with their shows’ ratings or success. For decades, we’ve read about how the casts of Friends, Modern Family, or The Big Bang Theory got huge raises in response to awards or climbing ratings; while we can’t know for sure, chances are that sort of system isn’t in place at most streaming services.
Everyone in the television industry recognizes that Nielsen ratings fail to capture the full picture of how many people watch a given show. But since it’s one of the few near-universal metrics available, it’s becoming more and more difficult to simply take Netflix at its word when the network claims all of its shows are doing well.

Casting A Wider Net

Make no mistake: The rise of Netflix has been a net positive for consumers. The network has fostered an environment where, in exchange for a comparatively smaller budget than premium cable or broadcast network shows, creators have the freedom to craft a show without interference from their network. It’s like what Louis C.K. got from FX for Louie, only multiplied many times over, and distributed among creators and actors from various entertainment backgrounds.
Take Narcos, an international show about cocaine kingpin Pablo Escobar and the Meddellin drug cartel with mostly Spanish dialogue; while the show received little critical fanfare, a recent study from data firm Parrot Analytics suggests that in September it was Netflix’s most popular show by a wide margin. Or Master of None, the best episodes of which spring from Aziz Ansari’s own issues with his heritage and his perspective as a minority actor auditioning for film and television roles. Unbreakable Kimmy Schmidt and Jessica Jones feature protagonists who are survivors of abuse. And Orange is the New Black deals with racial and sexual identity in ways few shows since HBO’s Oz (which kickstarted that network’s Golden Age) have ever been able to.
Netflix is attempting to widen its audience without needing to capture a large swath of viewers with every show, just a devoted niche. (even if Sarandos’ rhetoric suggests each of its shows is an across-the-board juggernaut). If microtargeting is indeed the future landscape of entertainment, then its goals—and the quality of its ever-expanding slate—is worth the arrogant posturing and refusal to report numbers.