Sepinwall: COVID-19 and the end of Peak TV

[Tom Wolper]

One thing about the decline of newspapers is that we don't get access to critics with insight about where the TV industry is going. Along with all the disruptions from streaming platforms and their different business models, now comes the pandemic and the ways it changes the production of series. Alan Sepinwall wrote this piece about the way it is affecting the business.

https://www.rollingstone.com/tv/tv-features/covid-precaution-protocol-budget-netflix-cancel-peak-tv-1075454/

[Doug Eastick]

I had to google "peak tv" to understand what the phrase meant.    I came across this website, intended for Canadians, which can help find where shows are available.

https://peaktv.ca/

On Thu, Oct 22, 2020 at 9:10 AM Tom Wolper <two...@gmail.com> wrote:

One thing about the decline of newspapers is that we don't get access to critics with insight about where the TV industry is going. Along with all the disruptions from streaming platforms and their different business models, now comes the pandemic and the ways it changes the production of series. Alan Sepinwall wrote this piece about the way it is affecting the business.

https://www.rollingstone.com/tv/tv-features/covid-precaution-protocol-budget-netflix-cancel-peak-tv-1075454/

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Doug Eastick <eas...@mcd.on.ca>

[Adam Bowie]

Buried in the Rolling Stone article it notes that it was FX CEO John Landgraf who came up with the term. I believe that at various TCAs over the years he's presented charts that detail the ever increasing number of original TV series that are being made - and I think he just considers US productions! 

Even without Covid, the numbers will have to settle down at some point. But we're still in the "invest to drive uptake" moment. Quibi may have died but most of the other streamers are backed by big corporations who will lose money on them for the foreseeable future. That's a bit different to the old "licence to print money" TV model of yesteryear...

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[PGage]

Yeah, I admit to vaguely assuming “Peak TV” was some kind of nuanced version of “Golden Age of TV”, but this article made clear it refers to quantity, not quality, of programming. 

The alarming part of the article’s thesis is not that we can’t live with 275 scripted television programs instead of more than 400, but the prediction that it will be the original and diverse shows that will get differentials pruned. I’m not convinced that’s true. I happen to have liked GLOW, but even at its peak it was not exactly top shelf, A+ content, either  commercially or artistically. OTOH, if something like “Orange is the New Black” came along, it seems like it would get renewed even in the current environment. Also, the assumption that there isn’t a mass audience for content about women, People of Color or Queer Folks is probably both unfounded and increasingly obsolete.

The thesis also seemed to assume that the added pandemic costs will extend far into the future. Perhaps. Vaccines and therapeutics are coming (though not on the Trump-timetable), but they will not lead to the elimination of the Corona virus. Still, it seems reasonable to expect that by Spring of 2022 we will mostly be back to congregating indoors without face coverings, especially in workplaces where employees can be confirmed to have been both vaccinated and tested negatively within the last month (week?).

If we still need to rely on face shields to manage the virus in two years, we will have bigger problems than losing B+ cable television programming.

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[Bob Jersey]

Alternative viewing option, incredibly with pictures, not always a thing with this site: https://outline.com/dLupY9 (link)

Sepinwall, from his New Jersey Star-Ledger days, had a standing invitation to join our little list since the early days of A.B., but never bit...

Tom Wolper, Oct 22nd:

One thing about the decline of newspapers is that we don't get access to critics with insight about where the TV industry is going. Along with all the disruptions from streaming platforms and their different business models, now comes the pandemic and the ways it changes the production of series. Alan Sepinwall wrote this piece about the way it is affecting the business.

https://www.rollingstone.com/tv/tv-features/covid-precaution-protocol-budget-netflix-cancel-peak-tv-1075454/

B
 

[Doug Eastick]

ok.... so I understand now that Peak TV means quantity.... or a large pile with a peak -- ok, got it.     I've been wondering about this crazy volume of productions for a few years now (basically once the streamers like Netflix started winning Emmys).   The crazy volume of shows, I don't think, can be sustained from an economical basis.   Sure all these streaming studios/channels will disrupt the TV economy/landscape, but is this not like the DotCom boom?  So much money out there based on vacuous or hopeful eyeballs and unproven models.

I would really LOVE to see some of the inside metrics of Netflix and their "renewal" decisions (prior to Covid-19).

Following on the impact to the business of Covid.... absolutely everything is becoming more expensive.... and I would expect that the Peak will have to decrease down towards the foothills of sustainable farmland.

[Adam Bowie]

On Fri, Oct 23, 2020 at 1:41 AM Doug Eastick <eas...@mcd.on.ca> wrote:

ok.... so I understand now that Peak TV means quantity.... or a large pile with a peak -- ok, got it.     I've been wondering about this crazy volume of productions for a few years now (basically once the streamers like Netflix started winning Emmys).   The crazy volume of shows, I don't think, can be sustained from an economical basis.   Sure all these streaming studios/channels will disrupt the TV economy/landscape, but is this not like the DotCom boom?  So much money out there based on vacuous or hopeful eyeballs and unproven models.

I think it's widely thought that there *is* also a new golden age of TV, because there are definitely a lot of high quality series out there. You still have to hunt though. Netflix may have hit it out of the park with House of Cards and Orange Is The New Black when it started. But now we get Emily in Paris... but also The Crown.

I'm certain that the model isn't economical any more. In the old days, there were massive syndication revenues to be achieved (and for some perhaps there still are), but now you have Netflix spending more than they earn, and attempting to make TV shows not just for the US, but the world. The UK is now their number three production base, but Netflix is making TV in pretty much every European country, as well as places like India, Australia and dozens of other places. And they're making movies - they want to win Oscars. And they're making reality TV. And then there's the vast volume of kids stuff that I suspect few of us here are watching.

They need to sign up a hell of lot of people to make their business model work.

Meanwhile Amazon and Apple can essentially subsidise their TV services while they play their game (Amazon can amortise their spend against other Amazon revenues, but I reckon Apple will be out of TV production in a few years' time). But the spending is just a rounding error on their spreadsheets. 

If you're HBO Max or Peacock, you have to build an offering that's equal to that of Netflix. Viewers expect it. 

It's all got to be unsustainable. And where it leaves traditional networks I have no idea.

I would really LOVE to see some of the inside metrics of Netflix and their "renewal" decisions (prior to Covid-19).

From what I've read, there's a whole bunch of stuff. They're looking at 28 day views from launch, as well as overall views. But they also really need stuff that brings in new viewers. So if a show has settled down with a viewership base after a couple of seasons, and isn't still growing, or bringing in new viewers, then it's more likely to be cancelled. 

There's also the production model and the costs. In traditional TV, the production company can do things with the show after it's been on network TV. They can put it in syndication, sell it globally, licence it to streaming services or whatever. That's where the profit for the studio who makes it comes from. But Netflix doesn't really do most of those things. So they have to overpay on production costs for their originals because they want *all* the rights upfront. So the only revenues the producing studios can get are the fees from Netflix. So these tend to be stepped upwards - the show gets more expensive the longer it's on air. While that's often true for network TV too - casts of hit shows getting massive pay bumps - there's those down the road deals to mitigate the increases. For Netflix, they just see costs increasing season or season.

There does seem to be a lot of "cancelled after two seasons" on Netflix, and these are some of the reasons. The downside for viewers is shows that don't wrap up properly or get left on unresolved cliffhangers. Will viewers start to get fed up with Netflix if they continue that? Maybe in due course.

Now you can factor in the Covid costs too. 

Personally I can't see the Netflix model ever making enormous sense. The scale they have to work at to entertain the world is too much. While Americans might watch the odd British show and certainly vice versa, the same isn't always true of, say French viewers or Indian viewers. They'll watch a bit, but they like things in their own language featuring their own cultures. So Netflix has to make local language stuff in pretty much every territory they operate in. Netflix *has* done a decent job with this to an extent - the Spanish series Money Heist is truly popular globally for example - but that's an exception. Netflix needs those global viewers to all be spending their $5-15 a month to make the numbers add up.

Adam

[PGage]

I don’t know if Netflix’s model will work, but I admire what they have been doing. They determined very early on, when they we’re still mostly mailing out DVDs,  that the future of their business was streaming. 

And they knew back then that eventually they would be going up against companies with MUCH deeper pockets than theirs. They also knew that soon enough the big content companies were going to stop making it so easy for Netflix by letting them pass on their product. So they decided to invest heavily in developing content, hoping that their commitment to spending, market share and name recognition would allow them to beat the big boys in the coming wars.

A decade or so later, those wars are here, and the fact that Netflix is still holding its own is impressive. Maybe they can’t spend their way to victory, but almost certainly if they stop spending, they lose.

Total Assets of Netflix and some competitors (per the Wiki report on each company page):

Netflix: $34B

Warner Media (HBO): $69B

Disney: $193B

Amazon: $225B

Comcast: $263B

I think Netflix’s strategy basically is to make it so expensive for most of the Big Boys to play the streaming game that they decide it’s not worth it to lose money in a non-core part of their business. If that is even part right, after an initial pandemic pause I would expect them to jump right back in to contributing their share and more of Peak TV. 

I have been rooting for them from the beginning, and I still am.

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[Adam Bowie]

I still like Netflix. It'll be one of the last TV services I cancelled if forced to make a choice. I enjoyed the new Aaron Sorkin movie last week, and this week watched the new version of Rebecca (lavish, but ho-hum - and I'm a massive fan of the director). It's a no-brainer if they keep churning out at this rate. 

But there was an interesting piece in Quartz this week about their reliance on library titles that they don't own. Those Friends, The Office and Parks & Rec re-runs are (or were) very popular. And they've not yet managed their own 100 episode+ bingeable comfort food like that. And if they keep cancelling stuff quickly, they never will.

https://qz.com/1918007/netflixs-original-shows-are-rarely-its-most-popular/

Incidentally, what I really don't like about Netflix is their corporate culture. Really quite savage. I recommend a recent podcast series by Peter Kafka and Rani Molla - Land of the Giants. The first episode gets into that culture: https://www.vox.com/land-of-the-giants-podcast

Adam

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[Doug Eastick]

Sorkin's new movie (chicago 7) is only on netflix because of COVID.  It was scheduled for theaters, but netflix picked it up in September.

(sorry I don't have a hyperlink for the article I read earlier this week)

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Doug Eastick <eas...@mcd.on.ca>

[Adam Bowie]

You're right: https://deadline.com/2020/07/netflix-closes-50m-deal-for-aaron-sorkin-the-trial-of-chicago-7-1202974968/

Paramount in particular has sold many of their movies to streaming this year. They sold Greyhound to Apple TV+ too.

Oh well, insert Mank, in the below :-) That's a true Netflix original - and I'm looking forward to that as well!

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[Tom Wolper]

On Thu, Oct 22, 2020 at 9:11 PM Adam Bowie <ad...@adambowie.co.uk> wrote:

It's all got to be unsustainable. And where it leaves traditional networks I have no idea.

In reading history we can come across a line like: The turning point came when x occurred." While we would like to know while x is occurring that it is a turning point we often just can't see the process from enough of a distance to grasp it. The rollout of Peacock seems more intense in a marketing sense than CBS All Access and I think we'll get a better sense of what Comcast thinks of network vs streaming by what they choose to put on NBC and what they put on Peacock.