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Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

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Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Old 03-18-19, 02:32 PM
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Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Feeling the Churn: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Can’t Move To New Homes

For decades, the success of a TV series had been measured by its longevity. The standard series regular contracts are for six years, which has been considered a threshold for a show to be deemed reasonably successful. Netflix may be rewriting the rulebook with a business model that involves shows often running for two to three seasons.

The Internet network also is assuring its series will remain Netflix exclusives even after their cancellation, with a moratorium allegedly built into deals that prevents axed shows from moving to a new home. That is despite the streamer readily taking in series canceled elsewhere, like Lucifer and Designated Survivor.

Netflix on Thursday announced it would not proceed with a fourth season of its lauded comedy series One Day at a Time. Producing studio Sony Pictures TV quickly started shopping it, and I hear there was an inquiry from CBS Corp’s CBS All Access platform, but the show’s Netflix deal would not allow for the comedy to move to another streaming platform.

Netflix also recently canceled all of its Marvel series after two or three seasons. They all had developed solid followings and drawn sizable viewership, so there was speculation when they were canceled they could migrate to Disney’s upcoming streaming platform Disney+, which will feature a lot of Marvel-branded original content. Disney and Marvel TV executives likely would’ve liked to do that, but again their Netflix contract did not allow them to.

I hear there is a standard clause in the deals for Netflix series from outside studios that prevents the shows from airing elsewhere for a significant period of time, said to be 2-3 years, making a continuation on another network/platform virtually impossible. That is probably why we haven’t seen CBS TV Studios’ comedy American Vandal — a breakout hit for Netflix when it launched but canceled in October after two seasons — move to CBS All Access.

I hear the moratorium on OTAAT is a bit less restrictive than others — a couple of years for SVOD but just a few months for network — which would allow the Latinx family comedy to pursue a fourth season on a broadcast network, for example. (For more on that, read our story.)

In addition to One Day at a Time, also canceled after three seasons at Netflix were Love, Bloodline and Hemlock Grove, with a slew of shows canceled after two. Besides Netflix’s legacy series House of Cards and Orange Is the New Black, the first two originals that put the streamer on the map and generated awards buzz throughout their six-season runs, there is only one live-action series that has lasted that long: comedy Grace and Frankie. In addition to also being an awards-attention magnet for its stars Jane Fonda and Lily Tomlin, the series comes from Friends co-creator Marta Kauffman, whose presence at Netflix is believed to have helped the streaming platform secure and maintain the sought-after SVOD rights to Friends, one of the most prized off-network assets available.

The Crown was bought by Netflix as a six-season series chronicling the life of Queen Elizabeth II. Outside of that, out of dozens of original live-action scripted series launched, only three have gone beyond three seasons. One is the reliable awards contender Unbreakable Kimmy Schmidt, which ran for four seasons, earning a slew of major nominations. The two others are multi-camera comedies done under a different business model — Fuller House, which will end after five seasons, and The Ranch, which has been renewed for a fourth season. (Hit drama Narcos was wrapped after three seasons and succeeded by a new series, Marcos: Mexico.)

I hear at least some of the cancellations on the list were prompted in part because the shows were deemed to have gotten too expensive. That is because of how many of Netflix’s series deals are structured. It is widely known that Netflix employs a “cost-plus” model, offering to pay upfront a show’s production costs plus a premium of 30%+ of the costs. Even after Netflix subtracts a distribution fee, outside studios are at break-even or in a positive territory from Day 1, versus having to deficit finance series for the first few seasons on most traditional networks. But in exchange for the upfront payments, outside studios give up the potential upside that normally comes up with owning a long-running successful series, including off-network and international sales.

Instead, Netflix’s deals include bump/bonuses after each season that are getting progressively bigger. White the payments are relatively modest after Season 1 and a little bigger after Season 2, I hear they escalate after Season 3, especially for series owned by Netflix — sometimes from hundreds of thousands to millions of dollars — as the studio starts to pay off the shows’ back-end. For series from outside studios, which I hear cost about 20% more than their Netflix-produced counterparts, I hear the built-in payment increases do not skyrocket as much but still are bigger after Season 3, Season 4 and beyond.

Netflix has been relatively patient, picking up a significant portion of its freshman series for a second season, giving them time to find their legs. But as the shows’ prices start going up, the network tightens its renewal criteria.

“It’s a combination of things, when we’re investing, we decide how much to invest based on the audience that will show up,” Netflix’s head of original content Cindy Holland said of the streamer’s cancellation decisions at the INTV conference in Israel last week. “If the audience doesn’t show up, we think about the reason to continue to invest in something that doesn’t do as well as we had hope. Obviously critical acclaim is important too, but we’re really about trying to stretch our investment dollars as far as we can and make good on our investors’ money – it’s theirs, not ours.”

For the most popular shows, like blockbuster hit Stranger Things, renewals are a no-brainer as each new season is an event, driving viewership and subscriptions. (Being owned by Netflix, Stranger Things also is a money maker for the company with auxiliary revenue streams such as theme park attractions and merchandising, including Halloween costumes.)

But for everyone else, there is intense scrutiny. Netflix is unabashedly data driven, with many of its decisions based on algorithms. That’s how the network reportedly switched from the initial (and traditional) 13-episode seasons to seasons of 10 episodes or less. Word is that those shorter seasons are considered optimal for consumption, and any additional episodes beyond 10 a season do not add value, so they are an unnecessary expense for the network.

The same goes for the number of seasons. If a show has not broken out in a big way during its first couple of seasons, there has been chatter Netflix does not see significant growth potential beyond Season 3 (and sometimes beyond Season 2).

As for acclaim, I hear anecdotally that strong critics reviews, which One Day at a Time has in spades, could get a show a second-season renewal at Netflix (but rarely a third). Beyond that, only major awards recognition counts as awards — along with strong worth of mouth/curiosity — are thought to help drive subscriptions. Despite its acclaim, One Day at a Time, maybe hindered by its multi-camera format, has not been able to land big nominations.

I hear One Day at a Time came close to cancellation last year when the show’s producers and talent rallied fans in a spirited renew-the-show campaign. Netflix ultimately gave it a reprieve, but it came with a warning. Despite the fact that One Day At a Time’s viewership had reportedly grown between Season 1 and 2 and Seasons 2 and 3, word is Netflix brass claimed its numbers still were not where the network wanted them to be.

I hear that, according to Netflix’s data, beyond Season 2-3, middle-of-the road series — even those with loyal fan base like One Day at a Time — would not generate significant new signups.

But new shiny things will. Netflix’s strategy to grow subscription base is focused on introducing new series all the time, sometimes multiple ones each weekend. According to industry observers, fans of some of the canceled series would be disappointed by their demise but not upset enough to drop Netflix as there is new product coming out all the time that catches their attention.

“At the core of their business is churn,” one industry insider said, noting that there are always subscribers who drop Netflix after a free trial period or a month or two later, and the goal is to get more people to sign up, which comes mostly thanks to hot new series everyone is talking about.

As an asset, having 30 episodes of a series (three seasons) is considered enough to satisfy viewers discovering the show. Tacking on more episodes does not add significant value, I hear. “A show doesn’t serve a purpose (anymore),” an observer said. “There is no reason for the network to continue to invest in it.”

That is why so many Netflix series are being outright canceled versus the streamer employing the oldest trick in every network’s bag: trying to renegotiate the terms of its deals. I have heard of instances when Netflix has sought reduction of previously agreed upon fees and bonuses based on a series’ performance. For example, there was some back-and-forth between Netflix and Marvel TV, including the network requesting a season-order trim from 13 to 10 episodes, before the streaming giant pulled the plug on all Marvel series that it had picked up years ago at a very high price. (There were creative issues on some shows as well.) The first Marvel series were a big draw as they were among the handful of original series on the service. Two, three seasons in, the shows didn’t get the same attention because of the huge volume of new product. Netflix has built an adequate Marvel library, which will live on the service, while the Internet company cut a major expense by canceling the superhero series to invest in new fare.

Additionally, like traditional networks in the era of vertical integration, Netflix has been ramping up in-house production, redirecting funds from outside productions to in-house series — including shows from its roster of A-list talent under rich overall deals such as Shonda Rhimes, Ryan Murphy, Kenya Barris and Shawn Levy — and thus avoiding the cost-plus surcharge it has to pay to shows from other studios.

The shorter runs are something spreading to other platforms, where shows also are ending relatively quickly. Amazon recently announced the upcoming fourth season of its flagship drama Man In the High Castle will be its last. Only one original series on Amazon or Hulu, Amazon’s Transparent, which put that service on the map, has gone beyond four seasons, with the majority of shows canceled after two or three seasons. Industry observers see the trend also carrying over to premium networks, which now have a dual play as linear and SVOD outlets.

“Fifty is the new 100,” an industry insider said, referring to the traditional milestone of 100 episodes that used to kick off a financial windfall for studios and profit participants from syndication and other off-network sales. It is now considered unattainable, especially on digital platforms, with 50 episodes pretty much the most you can get there.

Added another source, “they are proving that they are not in the back-end business.”
https://deadline.com/2019/03/netflix...KkP6ZuefOefgiA

Interesting article answering some questions a lot of people seem to have had recently.
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Old 03-18-19, 02:56 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Yeah, I kind of agree with Netflix that 2 to 3 seasons (at 10 to 12 episodes each) are generally enough for most shows to tell their story. Only the most serious bingers get excited about 100+ episode series.
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Old 03-18-19, 04:15 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

I don't mind that series end in 2 or 3 seasons if they properly wrap things up. It's when it's unexpectedly ended and the last episode was a major cliffhanger of things to come that I get disappointed with. I don't expect nor want things to continue endlessly forever.

Supernatural is the longest running live-action show I've watched, while One Piece is the longest running anime show I've watched... both of which are still on-going and both of which aren't as great as they once was, and both of which I wish would end, but I'm with them until they do I suppose.
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Old 03-18-19, 07:41 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

The Crown was bought by Netflix as a six-season series chronicling the life of Queen Elizabeth II. Outside of that, out of dozens of original live-action scripted series launched, only three have gone beyond three seasons. One is the reliable awards contender Unbreakable Kimmy Schmidt, which ran for four seasons, earning a slew of major nominations. The two others are multi-camera comedies done under a different business model — Fuller House, which will end after five seasons, and The Ranch, which has been renewed for a fourth season. (Hit drama Narcos was wrapped after three seasons and succeeded by a new series, Marcos: Mexico.)




BTW : Marcos : Mexico sounds AMAZING!
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Old 03-18-19, 07:50 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

They address OITNB:

“In addition to One Day at a Time, also canceled after three seasons at Netflix were Love, Bloodline and Hemlock Grove, with a slew of shows canceled after two. Besides Netflix’s legacy series House of Cards and Orange Is the New Black, the first two originals that put the streamer on the map and generated awards buzz throughout their six-season runs, there is only one live-action series that has lasted that long: comedy Grace and Frankie.”
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Old 03-18-19, 10:00 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

I don’t have to like it, but it makes sense. I can totally agree with the assessments about 10-episode seasons and more than 30 episodes being a barrier to entry ... but not allowing a series to move to a new home is ... sensible business and dickishness all at the same time. Moving to a new streaming home won’t drive any business for Netflix, but moving to a network very well could.

I wonder if deals like these will eventually have talent reconsidering before doing business with Netflix.

Sad to see OITNB go, but it has run its course.
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Old 03-18-19, 10:44 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Netflix believes, rightly or wrongly, that the escalation clauses make a show unprofitable from season 3 onward. Odd, since nearly all other businesses consider acquiring a new customer to be much more expensive than keeping an existing one. In any case, presumably the new home would pay Netflix a royalty of some kind. +something > -something, even if +something is small. Moreover, new seasons on another platform might drive subscribers to see previous seasons on Netflix, an additional bonus revenue source. I see this as making zero sense from a profit maximization perspective.
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Old 03-19-19, 05:49 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by Abob Teff View Post
Moving to a new streaming home won’t drive any business for Netflix, but moving to a network very well could.
Similar to how they licensed Bojack Horseman to Comedy Central.
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Old 03-19-19, 08:18 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

The truth is that the narrative of most shows doesn't need to go outside of 2 - 3 seasons. It's why British TV works so well. If Netflix wants to continue this then thats more than fine with me.
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Old 03-19-19, 08:54 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by randian View Post
Netflix believes, rightly or wrongly, that the escalation clauses make a show unprofitable from season 3 onward. Odd, since nearly all other businesses consider acquiring a new customer to be much more expensive than keeping an existing one. In any case, presumably the new home would pay Netflix a royalty of some kind. +something > -something, even if +something is small. Moreover, new seasons on another platform might drive subscribers to see previous seasons on Netflix, an additional bonus revenue source. I see this as making zero sense from a profit maximization perspective.
They don't see it as losing an old customer, they feel like the existing customer will move on to something new and shiny they're offering instead. They should have a ton more information about their viewership than even the networks, so they should know what they're doing. And they will keep the popular or buzz worthy shows around for longer.

As far as selling to other networks, other networks probably aren't chomping at the bit to bite on shows that are already long in the tooth from a competitor streaming network, not to mention the changes that would have to happen from creative to budget to get it on network tv. Can you think of a series that Netflix dropped that the networks would be chomping at the bit to sign on? Besides the ones with major licensing issues like the Marvel stuff (and even then something on the networks like Agents of Shield is basically a vanity project).
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Old 03-19-19, 10:14 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Even at their new 10-episode format, I think some of their shows could use some trimming even on top of that. Just because you can make an episode an hour long, doesn't mean you should. But I guess it's like the quote goes, no good movie is ever long enough, and no bad movie is ever short enough.
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Old 03-19-19, 02:41 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

I hear there is a standard clause in the deals for Netflix series from outside studios that prevents the shows from airing elsewhere for a significant period of time, said to be 2-3 years, making a continuation on another network/platform virtually impossible.
More than a year until next season is fairly common in Europe, so I'm guessing North Americans just can't wait that long.
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Old 03-19-19, 04:42 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Rumors indicate Netflix ratings also greatly decline over each season, even for key properties like their Marvel shows. While Netflix doesn't post ratings, a lot of clever people have measured customer engagement over social media for shows like Daredevil and the numbers aren't pretty. Things start out great in season one and then go on a completely downward trajectory, practically flatlining by the third season. Netflix shows don't seem to build ratings over time like traditional networks.
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Old 03-19-19, 05:24 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

The binge watch culture has hurt many shows in the streaming era.

Let's be honest, nobody really talks about streaming shows on a regular basis, especially in this forum.

You go on your Roku, watch the 10-13 episode season in maybe 1-3 days and then maybe post a 1 paragraph thought and forget about it. I would say more than 75% of the streaming show threads here are dead. I've heard stats that these streaming shows and people talking about them on social media has also declined dramatically. There is rumors that Netflix may post future shows weekly to help build interest in them as opposed to binge binge, binge, show discussion dead.

These shows aren't cheap to make and Netflix along with other streaming providers need people to keep watching and tell their friends about it. Not just watch and forget about it.
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Old 03-19-19, 05:38 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by DJariya View Post
The binge watch culture has hurt many shows in the streaming era.

Let's be honest, nobody really talks about streaming shows on a regular basis, especially in this forum.

You go on your Roku, watch the 10-13 episode season in maybe 1-3 days and then maybe post a 1 paragraph thought and forget about it. I would say more than 75% of the streaming show threads here are dead. I've heard stats that these streaming shows and people talking about them on social media has also declined dramatically. There is rumors that Netflix may post future shows weekly to help build interest in them as opposed to binge binge, binge, show discussion dead.

These shows aren't cheap to make and Netflix along with other streaming providers need people to keep watching and tell their friends about it. Not just watch and forget about it.
To me it's not only the binge-watch culture, but it's related, it's the idea that these shows are going to be available in perpetuity, and that I can watch whenever I want to. What motivation is there for me to watch it right away? Into the backlog it goes.

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Old 03-20-19, 03:48 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by fujishig View Post
To me it's not only the binge-watch culture, but it's related, it's the idea that these shows are going to be available in perpetuity, and that I can watch whenever I want to. What motivation is there for me to watch it right away? Into the backlog it goes.
I think this is a very real thing. At least for me. I'm not too sure I'm all for catering to this binge watching. Sure it encourages development of flashy new shows but then it seems to work against establishing a long running series. It doesn't give a show a chance to really get it's legs and go the distance. Think along the lines of shows like Friends, Frasier, Seinfeld, the Sopranos, Star Trek TNG these shows all would have been cancelled after their 3rd season and yeah that's enough for bingers but it's really a disservice to developing true fans.
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Old 03-20-19, 03:57 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

I like binge-watching. It gets me immersed in the story more than one-hour chunks a week apart. Besides, if you won't open with all episodes available immediately, I'll just wait 10 weeks or so and watch all of them then.
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Old 03-20-19, 11:34 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by fujishig View Post
To me it's not only the binge-watch culture, but it's related, it's the idea that these shows are going to be available in perpetuity, and that I can watch whenever I want to. What motivation is there for me to watch it right away? Into the backlog it goes.
This is the case for my wife and I. We often wait until a show has been completed before starting. On the few shows we watch as they come out, we still tend to wait weeks or months depending on what we're currently watching.
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Old 03-20-19, 11:35 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by fujishig View Post
To me it's not only the binge-watch culture, but it's related, it's the idea that these shows are going to be available in perpetuity, and that I can watch whenever I want to. What motivation is there for me to watch it right away? Into the backlog it goes.
This is the exact reason I give to my friends when they're shocked that I haven't watched a particular show on Netflix. I just don't feel the pressure to go in there to watch. That's why I still prioritize my DVR and ongoing network or cable shows. Of course, I know I'm a rarity in these days of cord cutting
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Old 03-20-19, 03:10 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

This is what my wife and I did with Hulu shows.
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Old 03-20-19, 03:47 PM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

That's exactly my point. People think streaming are going to be there forever and there's no urgency. I bet there's many who haven't even touched any of the Marvel Netflix shows thinking they can watch them anytime with no pressure.

Netflix, Amazon, Hulu want you to talk about their shows when new seasons come out. Not wait months, years later. Amazon wants you to talk about & watch the new season of Bosch coming up in a few weeks now...not 6 months or a year from now. Netflix wants you to watch and spread the word on Umbrella Academy now. I can understand to some extent why Netflix is cutting back now since these shows are expensive and they don't want them sitting unwatched.

I know there's a lot of shows and movies on Netflix and trying to prioritize what to watch in addition to what's on TV and cable makes things extremely overwhelming and something has to get put on the backburner. Most likely stuff you record on your DVR for shows that only air once gets priority.

There's so many streaming shows right now and maybe 1 in 5 gets any kind of attention in this forum.
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Old 03-21-19, 09:10 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by fujishig View Post
They don't see it as losing an old customer, they feel like the existing customer will move on to something new and shiny they're offering instead.
There where the problem lies for me. There isn't enough quality new and shiny to take the place of a series I have invested 2 or 3 years in to have them end it because of a business model.


Originally Posted by DJariya View Post
The binge watch culture has hurt many shows in the streaming era.

Let's be honest, nobody really talks about streaming shows on a regular basis, especially in this forum.

You go on your Roku, watch the 10-13 episode season in maybe 1-3 days and then maybe post a 1 paragraph thought and forget about it. I would say more than 75% of the streaming show threads here are dead. I've heard stats that these streaming shows and people talking about them on social media has also declined dramatically. There is rumors that Netflix may post future shows weekly to help build interest in them as opposed to binge binge, binge, show discussion dead.

These shows aren't cheap to make and Netflix along with other streaming providers need people to keep watching and tell their friends about it. Not just watch and forget about it.
That makes a lot of sense.

Originally Posted by fujishig View Post
To me it's not only the binge-watch culture, but it's related, it's the idea that these shows are going to be available in perpetuity, and that I can watch whenever I want to. What motivation is there for me to watch it right away? Into the backlog it goes.
And once it goes into the backlog for me; it is usually forgotten because something else will fill the void.

Then there is the should I invest my time in a show that may or may not have a conclusion or get another season. I wait on some to see it is renewed. I waited forever to watch Safe on Netflix. I loved it. It was completely contained and I liked that.
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Old 03-21-19, 09:26 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by d2cheer View Post
There where the problem lies for me. There isn't enough quality new and shiny to take the place of a series I have invested 2 or 3 years in to have them end it because of a business model.
But all shows end because of a business model. It would be better if the showrunners and writers had a concrete plan that they could adapt as they see fit. If you know that the business model of a Netflix show means that you probably won't get a third season or beyond, write to that, and if it extends, great! But if you run out of show to tell, end it. It is closer to the British model of shorter seasons, but I think we're so used to long, drawn out seasons to fill network tv that the networks won't change easily. That probably works best for sitcoms and other episodic formats, but for a lot of procedural shows, there's usually just tons of filler and an abrupt, unsatisfying ending.
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Old 03-21-19, 09:27 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by PhantomStranger View Post
Rumors indicate Netflix ratings also greatly decline over each season, even for key properties like their Marvel shows. While Netflix doesn't post ratings, a lot of clever people have measured customer engagement over social media for shows like Daredevil and the numbers aren't pretty. Things start out great in season one and then go on a completely downward trajectory, practically flatlining by the third season. Netflix shows don't seem to build ratings over time like traditional networks.
Like literally (almost) every show on broadcast TV, there are drops season to season. It isn't exclusive to just Netflix or ABC or Comedy Central. Rarely does a show grow in future seasons.
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Old 03-21-19, 09:30 AM
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Re: Why Netflix Cancels Shows After A Couple Of Seasons & Why They Canít Move To New Homes

Originally Posted by DJariya View Post
That's exactly my point. People think streaming are going to be there forever and there's no urgency. I bet there's many who haven't even touched any of the Marvel Netflix shows thinking they can watch them anytime with no pressure..
But there is no pressure. Those Marvel shows will be on Netflix for years to come.
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