Netflix and Amazon Have Been Lying to You

In past articles, I have admitted my issues with streaming services such as Netflix and Amazon and all their subsidiaries. I don’t have much of a problem with the quality of much of the programming – I’ve had a lot of fun with Fleabag and Russian Doll and have been taken to new worlds with Stranger Things and Homecoming. But there’s always seemed to be something flawed with their business models that has never added up from the beginning.

For much of the decade, we keep hearing things about how shows like Orange is the New Black or Glow or Grace & Frankie have been huge hits for Netflix. What has never been quantified by Netflix is how they are classified as huge hits. As flawed as I have found the Nielsen rating system to be for broadcast and cable television, at least it succeeded at its main job of telling us just how many people were watching a show. It been more than eight years since Netflix started airing original programming, and we have yet to get a clear idea as to how many people are watching, say, The Crown or Peaky Blinders.  A few days ago, I read somewhere how Netflix is doing – and I was appalled.

For years, they’ve been releasing absurd numbers saying that sixty million people watched House of Cards or forty-eight million watched Dead Like Me. I’ve often wonder how they got these numbers that not even Super Bowls have managed. Then I learned that basically it means that’s how many people have watched the first two minutes of the first episode. Um, WTF? If this is accurate, it may mean that more critics have watched entire seasons of Master of None or AfterLife than have ever watched the show.

How the hell does something like this happen? I have had my issues with how opening box office success seems to determine what makes a hit movie for the last thirty years. It’s always struck me as a faulty business model -  10 million see it week one, and maybe 2 million see in it week two, but who cares because the studios have already declared victory. (This model may explain better than anything how Transformers and Twilight were ever considered successful franchises). But it’s a firmly established plan compared to how Netflix seems to be willing to do business all this time.  At least those people actually saw the movie the first week. Here, it’s the equivalent of watching the opening credits and then walking back to your car.

And as shallow a method as this is, it at least goes through the motion of having an audience. Amazon and Hulu have been showing original programming for more than five years, and we still don’t know how many people are actually watching Transparent or The Handmaid’s Tale.

This is shocking on a lot of level, but perhaps the most appalling is that it’s a terrible business model. For years, I’ve been trying to figure out how these streaming services can be making any money off these shows. Even if each of these services had 20 million subscribers apiece (which wouldn’t nearly account for the viewers for some series, but let’s let that go for now), it couldn’t possibly cover the revenue stream needed to cover the budgets of some of these series. How can you possibly spend billions of dollars a year on programming and expect to make a profit?

I found the answer to that in a different article – they’re not. Netflix has been spending billions of dollars on dozens if not hundreds of series over just the past decade, and as a result now find themselves in a massive debt. How long they can continue to operate at this speed is questionable, especially considering how new streaming services like Apple and HBO Max can only cut into their stream. Amazon understandably has deep pockets, so they might be able to last for awhile. God knows how other streaming services will survive.

Streaming surfaces have made television viewing much harder the last few years, from completely wrecking how the average viewers watches television to their being to many television shows to watch to cause so many other cable networks to either shut down original program or consolidate with other networks. Now, it seems that they have been little more than a Ponzi scheme when it came to actually making a working business model. The broadcast networks have already paid for this, first at the Emmys, then as having an audience at all. Cable networks are beginning to fold up at this because it’s too expensive. When Netflix reaches saturation point? At this point, they might need every viewer on Earth just to break even.

What does any of this mean for television viewers? I’m really not sure yet. I don’t regret that I followed the Netflix model – they created some truly wondrous and brilliant television over the years, and I’ll admit it would be a real loss for anyone who likes quality TV if they were to start going into collapse mode. It does, however, make me wonder about so many series on the surface that are announcing the end of their runs after just three or four seasons. That’s been a model that Netflix didn’t create, but I’m now wondering whether Russian Doll or Dead to Me have limited runs because of their creator or their Medici’s.

I’m going to keep watching Netflix, and I’m not going to urge anybody to stop. That said a couple of words of caution. First, don’t assume that ‘everybody’s’ watching a Netflix show just because you hear it somewhere. And those massive contracts that Shonda Rhimes and Ryan Murphy have signed? Don’t be shocked if they don’t start having ‘creative problems’. We may be reaching the time where Netflix has bitten off more than it can chew.