ALTERNATE ROUTES: The Broadcast Television Exodus to Netflix

If you think those broadcast television hit shows will stay on traditional networks, think again. Marty Lang explains the vast changes happening right now in the TV industry.

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It started with one episode.

Kenya Barris, showrunner and creator of the hit ABC television show Black-ish, told the press a new episode would not air, because of “creative differences,” saying neither ABC nor he were happy with its direction. The episode in question dealt with numerous social and political issues, including NFL football players kneeling during the playing of the National Anthem.

But after the announcement, word broke last week that Barris was not happy with ABC, and that Netflix was interested in signing him to a large overall deal. Adding more drama to the situation, this comes less than a year after Barris signed a four-year extension to his ABC deal. Barris has also not spoken publicly about the situation since, which has created speculation about a creative impasse with his broadcast network home. Sources told The Hollywood Reporter that talks are underway between Barris and the streaming giant.

Barris isn’t the only major broadcast hitmaker to listen to overtures from Netflix, either. Last August, ABC’s drama powerhouse Shonda Rhimes, creator of Grey's Anatomy, How to Get Away with Murder and Scandal, announced she would leave the network after 15 years to sign a deal with Netflix. And ABC isn’t the only broadcast network to lose a major hit drama creator to them, either – Shawn Ryan, creator of the hit Fox shows 911, American Horror Story and Glee, signed a mind-boggling $300 million deal with Netflix in January.

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What are the reasons for these A-list creators making the move? Obviously, money is a major factor; the deal Ryan signed is said to be the richest television producing deal of all time, and while the financial details of Rhimes’ deal have not been released, it’s said to be upwards of $100 million, much higher than the $10 million she made annually with ABC. Also, because streaming on Netflix eliminates syndication opportunities for shows (since they play globally on their platform), Rhimes’ deal includes new backend profit definitions, which will earn her that much more.

The increase in streaming activity has also led to an influx of capital from Wall Street for streaming services, too. The Economist reported in 2016 that Netflix accounted for 35% of peak internet traffic – an incredible statistic, considering that ten years earlier, the technology didn’t even exist. That dominance has led to incredibly high budgets for content creation and licensing; their $6 billion annual spending on this was, at the time, triple that of HBO, the second highest spender.

But the very structure of a streaming network allows for a different approach in creating television. Broadcast television survives on advertising, which means networks are often beholden to the advertisers that spend money with them. If a creator puts out content that ruffles too many feathers, it may cost the network money if an advertiser leaves. As such, they sometimes step in and stop programming from airing that might be too controversial. They also present shows with ad breaks, only at particular times, and are dedicated only to the United States viewing audience.

Streaming networks, however, survive on subscription fees. And they deliver a very different kind of television experience – they present shows from all over the world, without ad breaks, and on demand. And while the networks do present options to watch their shows online, it is an extension of their core business. Networks like Netflix, Amazon and Hulu are on demand, all the time – you can watch whatever you like, on whatever device you like.

Perhaps most importantly for a show creator, streaming networks have been more interested in programming that might not appeal to mass audiences, but that will appeal intensely to niche audiences. (Think the Netflix drama 13 Reasons Why, about teen suicide.) Tackling taboo subjects, or creating controversy, is not a problem for a streaming service. In the case of Barris, this might be one reason why he’s looking at heading to Netflix; it may be less likely he would run into creative disputes with the streamer than with ABC.

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These networks also have different criteria by which they determine success for shows. While broadcast networks rely solely on Neilsen audience numbers, which help form their advertising rates, Netflix has a plethora of other data they can utilize. An analytics blog called Kissmetrics listed some of the many things Netflix can track during a customer’s experience, including:

All this data can help them to make decisions about what kinds of content they want to provide or create. Kissmetrics explained:

If you’re watching a series like Arrested Development, Netflix is able to see (on a large scale) the “completion rate” (for lack of a better term) of users. For example, the people at Netflix could ask themselves “How many users who started Arrested Development (from season 1) finished it to the end of season 3?” Then they get an answer. Let’s say it’s 70%.

Then they ask “Where was the common cut off point for users? What did the other 30% of users do? How big of a ‘time gap’ was there between when consumers watched one episode and when they watched the next? We need to get a good idea of the overall engagement of this show.”

They then gather this data and see user trends to understand engagement at a deep level. If Netflix saw that 70% of users watched all seasons available of a cancelled show, that may provoke some interest in restarting Arrested Development. They know there’s a good chance users will watch the new season.

When Ryan first met with Netflix about signing with them, content chief Ted Sarandos went over confidential data on the viewing habits of its 117 million global subscribers. He even showed Ryan a map of the countries where his programs were the most popular.

“I left that meeting feeling that I had seen the future,” Murphy later said.

Broadcast networks would do well to listen to Murphy. Because like Rhimes, and perhaps soon Barris, that’s where he went.

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