The Sternberg Report

Why Netflix is the Best Thing Ever

Four years ago, I wrote an article for MediaPost explaining why I thought Netflix was poised to enjoy tremendous growth. We had just subscribed, and I thought it had a potentially brilliant model for success.

I ended my article with the following:

“So far Netflix hasn't had any impact on our regular television viewing, but it has cut sharply into our pay-per-view movie and DVD viewing.  I think it's the first thing that's actually cut into my son's videogame playing.  We like the basic platform so much, however, that if and when Netflix does strike more content deals for top TV shows and movies, it will probably have a much bigger impact on our TV viewing -- especially in the summer.  The company has the right model, and seems to have hit that rare chord with kids, teens, and their parents.  

The real question is, can Netflix maintain a per-subscriber charge of what amounts to less than $100 per year (with no advertising) and be able to afford the highest-profile premium television content?  If the company gets enough subscribers, maybe it can.  Netflix certainly has a better chance of thriving than any of the other streaming platforms currently out there."

While my wife and I only watched it occasionally at first, but my tween son loved being able to go on anytime and watch multiple episodes shows like Family Guy.

There were some initial drawbacks, of course.  Most of the stuff we wanted to watch, the best movies and most current TV shows, were not available.  My then 12-year-old son said at the time, “I like Netflix, but it kind of sucks.”  I thought this was actually a profound comment that indicated why Netflix had so much potential.  If we liked it when it sucks, how would we feel when it no longer sucks?

When I told my now 16-year-old son that I’m writing another article about Netflix, his first comment was, “Tell them it no longer sucks, and we love it.”

While there is a lot of talk about people binge watching every episode of new shows as soon as they become available, I suspect relatively few people actually do that.  My wife, son, and I watch Daredevil together (it took us about two weeks to watch all the first-season episodes) and are looking forward to AKA Jessica Jones (also from Marvel).  My wife and I watch House of Cards together (available since February, we just started watching season 3 this week – so far two or three episodes a night).  We will also be watching Longmire, which we watched on A&E and will soon air original episodes on Netflix. When my mother-in-law comes over, she and my wife watch Grace and Frankie.

My son likes searching Netflix for shows he hasn't yet seen but might like (recently discovering Archer - not sure how pleased I am about that).  We also just started re-watching 30 Rock together from the beginning.

The main reason Netflix continues to grow and thrive is that it does not have the same constraints as ad-supported networks, most importantly needing to worry about average minute ratings. We’ve seen time and again, a broadcast or cable network unsuccessfully trying to air a program that does not fit in with the bulk of its lineup.  While reach is considered for media planning, the only things that really matter for programming decisions are average ratings and network rankings (among artificially constructed age groups such as adults 18-49 and 25-54).

Netflix does not need to worry about any of this.  It doesn’t care about adults 18-49 or 18-34.  A 60 year-old has just as much value to Netflix as a 25 year-old – maybe more so since older viewers tend to be more loyal.  Netflix wants Longmire and Grace and Frankie to appeal to different viewers than Orange is the New Black.  Reach matters much more to Netflix than average audience.  That’s how you get and sustain subscribers at this price point.  Ten bucks or less per month is not going to make me drop Netflix even if there are only two original shows I currently watch.  My family likes some of the same, but some different shows.  I know that eventually there will be another one I like.  And when the broadcast networks are in repeats, and there’s nothing I want to watch on cable, there’s always something I can find on Netflix.

It’s the best thing ever.

Binge Viewing: A Thing or Not a Thing?

The first time I heard the term “binge viewing” was not when Netflix released its first season of House of Cards, but rather when people would buy DVD’s of certain shows to catch up on the first season or two.  I did this with Mad Men.  I had seen the pilot, but not the rest of the first or second seasons.  Friends were constantly telling me how good the show was, so about a month before the season 3 premiere, I bought the first two seasons, watched every episode, and became a regular viewer.  I did the same thing with Breaking Bad and The Walking Dead (although I caught up with marathons on AMC, rather than buying the DVDs).

 
Before binge viewing even had a name, DVRs enabled people to store and watch more than one episode of their favorite shows in one sitting.  FOX’s hit drama, 24, was one of the first to fit this category.  The show actually debuted about five years before Nielsen started measuring DVR activity.  The show was so intense for TV (at the time), and initially each episode left viewers hanging so much, that it was a natural for multiple episode viewing via DVR.  A lot of people simply didn’t want to wait an entire week to see the next episode.

 
Even before that, many cable networks built their lineups on binge viewing with a scheduling tactic known as “stacking,” whereby they are several consecutive episodes of the same program.

 Hulu seems to be making a big deal out of acquiring every episode of Seinfeld, but I can’t imagine much binge viewing there.  It’s been on in syndication and on cable for so many years, it’s probably binged out by now.  This probably won’t have much impact on getting new subscribers or substantially increase viewing.

 Not many people really wanted to watch every episode of NBC’s Aquarius at once (so no one should draw any conclusions based on any of its viewing trends that might be made public – unless none are, in which case we’ll know enough).

 Ironically, Netflix, the viewing source that gave binge viewing its name, probably has less binge viewing than any cable network with stacked programming.  I would think viewers spend much more time every month watching Law & Order: SVU, Modern Family and NCIS on USA, Criminal Minds on ION or Big Bang Theory on TBS than they do watching any single series on Netflix.  If that is not the case, I’d love to see the data.

 

But Netflix will continue to be a major and growing factor on television viewing.  It's programming model is different from traditional networks in that it doesn't concern itself with an average audience as much as it does with reach.  Because Netflix relies on subscriptions and not advertising, it's programming is not designed to appeal to the same or even similar audiences.  18-49 is a meaningless age group if you aren't seeking advertising (and should be anyway).  To a service like Netflix, a 60 year-old viewer is just as valuable as a 25 year-old viewer,  maybe more so since they tend o be more loyal. 

House of Cards might have some overlapping viewers with Orange is the New Black, but their core audiences are substantially different.  Certainly Daredevil and Frank and Gracie are similar to neither nor one another.  It is a brilliant model.  The only two original series I currently watch on Netflix are House of Cards and Daredevil.  It is worth less than 10 bucks a month to me just to be able to watch these two shows.  I'll probably also watch Longmire, which Netflix picked up after A&E canceled it.  My 16-year-old son likes searching Netflix for shows he hasn't yet seen but might like (recently discovering Archer - not sure how pleased I am about that).

So to go back to my original question, binge viewing is a thing, but it’s not a new thing, and the impact all these streaming services currently have is probably similar to the impact a new mid-size cable network would have – 0ccasionally siphoning viewers from other networks, occasionally adding new viewers to the mix, and occasionally generating more fear than warranted among those who always fear something new that can’t be measured and fit into a tidy box the way they are accustomed to doing.

Evaluating the New Fall TV Series

My friends and family think its cool that I get to see all the new series pilots before they air on television.  It actually is pretty cool, but it's not always fun.  That's because I have to watch them all - the good, the bad, and the very bad.  After examining the fall schedules and watching most of the pilots, here are a few takeaways – keeping in mind that hits are almost always a surprise:

Scheduling Trumps Buzz, Part 1:  I’m not sure why ABC’s The Muppets is getting so much buzz this pre-season, or why anyone thinks it will be a hit.  But airing opposite NCIS, The Voice, and The Flash, does not bode well for its chances.

Weak Comedy Development:  How else to explain scheduling NBC’s People Are Talking (not a single funny moment in the pilot – although my 16-year-old son says there was one funny scene) and CBS’s Angel From Hell (starring Jane Lynch, which I really wanted to like, but just couldn’t)? 

CBS’s Life in Pieces is a Modern Family wannabe, which might be helped marginally by following Big Bang Theory.  It has a good cast (James Brolin, Diane Wiest, Colin Hanks), so maybe subsequent episodes will be better than the pilot.  For some reason, NBC will have a revival of Coach in mid-season (can Nielsen even measure a median age over 70?). ABC’S Dr. Ken has some potential, but the network is basically throwing it away on Friday behind the incompatible Last Man Standing.

On the other hand, I didn’t expect much from a comedy starring Rob Lowe and Fred Savage, but FOX’s The Grinder looks good.  I really enjoyed the pilot.  Another FOX comedy, Grandfathered, starring John Stamos, also has potential, particularly if Criminal Minds alumna, Paget Brewster continues to have a strong presence in the show.

CBS will likely need to bring back Odd Couple, 2 Broke Girls, and Mike & Molly sooner than they expect to.

Vagina is the new Penis:  Several years ago, when the word “penis” was first allowed on ad-supported television, it became so overused in network comedies that it quickly subsided.  One hopes that the same will be true with “vagina,” which has already stopped being funny or shocking.

Scheduling Trumps Buzz, Part 2:  CBS’s Supergirl is probably the most buzzed about new series on the five-network schedule.  The pilot is very good. So hey, let’s schedule it opposite FOX’s Gotham.  While it might be true that Supergirl will attract a slightly younger viewer, the bulk of its potential audience is exactly the same as Gotham’s.  But it will also air opposite Dancing With the Stars (median age 60+) and The Voice (median age 53), so there may be room for two superhero-based series here.  It would undoubtedly do better in a different time slot though.

It will be interesting to see where CW places DC’s Legends of Tomorrow in mid-season.

Crime/FBI Dramas are Still Strong:  The broadcast networks are still able to produce high quality dramas. NBC’s Blindspot, ABC’s Quantico, and FOX’s Rosewood are best of the bunch.  On the non-crime front CBS’s Limitless and Code Black are worth a look.

At this writing, NBC’s Heroes Reborn and FOX’s Scream Queens have not yet been made available for screening.  Both will get a lot of buzz, which, as usual, will have no relation to whether or not they succeed.