The Troubling Truth Of Streaming Numbers (Patreon)

So! I ended up having a big twitter thread about this subject, but I figured it was important to turn these these thoughts into a quick essay to have it all in one place. Because we HAVE to talk about the ongoing problems with streaming numbers reporting. Because it seems like every few weeks I see some insane number get floated out there and it's like they’re saying "every show we have on our service was as big as the MASH finale!"

The problem is these numbers are both meaningless and damaging.

First of all they're only counting the first two minutes of any watch which could mean literally 12 people watched this show and millions were like "oh god no" and turned it off. We don't know the difference because they're not telling us. Which brings us to the bigger problem: they have virtually no reason to tell us what the real numbers are. Because it means they can juke the stats to say they have a massive hit - or juke the stats internally and tell people who work on their shows the numbers are low.

Now why would they want to do either of those things?

Well, telling the public that a show is a HUGE hit is basically free advertising and PR. People like hit shows / joining the social conversation / seeing what the fuss is. And if those numbers are fudged, you can basically pretend a show is a huge when it isn’t. I’ll put it this way, Ratched supposedly had 50 million viewers and I genuinely don’t know a single person who watched it. LOST had like 15-19 million viewers on average and it seemed like every single person in the universe watched it. Something isn’t adding up and we’ve never really seem these kinds of numbers get tossed out there EVER.

So wait, if they can act like EVERY show is a hit why would they also hide the numbers and the juke the stats to make them seem low internally?

Well, that has to do contract incentives and telling creatives they did not meet them, but really so much of it has to do with backend in general. And what is backend?

In TV and in particular movies a lot of the above the line talent gets backend points which basically amounts to shares of profits. People think of this as only relating to box office, but the real story of Hollywood finance is in long-term sales. Sure, we know that a TV show generally has ad revenue, but it REALLY makes money when it goes into syndication. Likewise, a TV show or movie will get its rights sold across the world and air constantly and every time it does, it makes money and goes toward the studio profit, along with back-end. Yes, often this is small for individuals with the tiniest of slices. If you have actor friends it's always funny when they get a check and are like "oh sweet 9 cents for that time I had a bit part for CSI!" But the thing I want to impart is that that money adds up.

And it adds up to the point that it is the MAJOR source for studios financial ability to whether the ups and downs of a given box-office year. Because it's how they get consistent cash from their library of titles. I mean, no one is talking about how JAWS is still making money (and in the blu ray year, it was A LOT of money). Just as no one was realizing 4 JILLS IN A JEEP (1944) is still making money. And these libraries are HUGE. There are thousands and thousands and thousands and thousands of bits of media out there that are still being show and making money. And it's A LOT of money. That’s just good for studios, right?

Of course. But the unions realized that a long time ago and fought so that movies / shows also has back-end points that go into the union. I cannot overstate how critical this money is to their function. It goes right to health plans, pensions, protections, workman comp, general funds, and in short, it makes a film's success a success for everyone.

But now here's where we get to the streaming of all of it.

In streaming, there is no back-end. Netflix is not selling your show a hundred times over. It's not putting the movie in theaters. It doesn't have to do ANY of those things. It's producing a work they solely own and exhibit forever. A closed loop. Now, this is obviously a problem for Hollywood's top talent, so what it means is that prospective back-end gets negotiated up front and put into their fee (hope you have a good agent!). But the real ones suffering are the unions and smaller artists, especially ones who make these sudden runaway hits where "millions of people” are supposedly watching. Without any backend, they're not seeing any financial part of the success they created. Which brings us to the age old wisdom of "that's fine, you get to renegotiate your new higher salary next time when the contracts up!"

Only the streamers, particularly netflix, aren't doing that.

They're cancelling hit and even modest hit shows the second new contract negotiations come up. Some of this has to do with their creative philosophy (or the lack), but they're moving onto other cheaper artists / whatever fresh new thing. They’re turning it all into smash and grab jobs. But isn’t that just smart business? That’s what Netflix is trying to argue, cue this tweet from @SweetCammyMac who asked “I recently read that streaming services (maybe just Netflix?) don't want a show to go for more than 2 seasons, because anything after that doesn't help bring in new subscribers.”

The whole problem is that it is a terrible reading of their data and contrary to just about everything we’ve already established about subscription models. HBO will tell you that taking great shows past a couple seasons can ABSOLUTELY bring in new subs. In fact, it's the best way to do just that. Quality wins. People forget the ratings for Breaking Bad went up every season and kept bringing in more people to AMC. And look at the ratings for Game of Thrones. These successes were absolutely CRITICAL for their businesses and both saw major dips when these shows went off the air. So why isn't NETFLIX realizing that?

The simple reason is because they haven't had a GREAT show yet that scaled up (outside of Bojack Horseman, that went 6. Also Stranger Things is about to hit the real test in the next few seasons). They have a lot of mid-tier shows that people maybe click on and check out, but don’t penetrate the larger market. Again, it’s mostly errant creative models. A single season drop is a great way to introduce people to a show, but it is a TERRIBLE way to sustain an audience. Whereas Disney Plus understands you can grow an audience by releasing week to week and dominating conversation. New seasons of Netflix shows drop and are out of the spotlight within a single weekend. So much is OBVIOUS to the rest of the industry.

The thing about Netflix is they are constantly misunderstanding their own data because they look at it from tech perspective over a common sense creative one (there’s public horror stories, but a lot more private ones). They’ll see the overall picture and be like “ratings drop off after four episodes, so people must want four episode seasons!” And they’re constantly ignoring how QUALITY of product is influencing drops in viewership. I swear every time I see Netflix talk about their data it's like the scene in THE JERK where the gunman is shooting at Steve Martin and hitting the cans and he's like "He hates these cans!" No, he doesn’t. Just like people don't "prefer" two seasons of slapdash TV that peters out quick.

What they love and have always loved, is living within the world of a show and inviting the characters into their home. This drives admiration, success, brand loyalty, and all the things that made so many cable channels a destination in the first place (and it’s also what made the streamers viewing destinations, too, if they can remember). This is also the reason why I don't talk about the business side a lot. There are a lot of interesting things to talk about, but the essential core of any business model still comes down to quality of product. Which is why I virtually spend all my time talking about the ways we can maybe kinda sorta hopefully make better media.

Anyway. What's hilarious is I acknowledge that years ago the studios would have LOVED to have some of this “not having to tell the numbers thing” because it meant they wouldn't have to have shared backend, etc. But now we're undoing basically everything those artists and unions fought for.

"But but but please tell me it's good for consumers?"

Sorry, it just means your favorite shows are going to get cancelled more and for less good reasons. Also movies don't make economic sense for streamers soooooooo not looking great on that front either.

Who is this ultimately good for?

The answer, like most late stage capitalist developments, is always just the major streaming companies and that's it. So it may just seem like numbers reporting, but it's part of the ever-widening, horrifying jaw of the haves and have nots.

<3 HULK