Will Netflix really save the “cult shows”?

Posted by & filed under Technology.

So, Netflix went boldly where no other rental company went before and bought itself a TV show, so it can be not only a middleman between the spigot of Hollywood TV creations and viewers, but the supplier of show(s) as well.

If the price is right, sure, why not? The real question is, will it bring any benefit to the Netflix, and will the company continue to move in this direction. The first thing that most geeks (including moi, of course) rushed to speculate about is the idea that Netflix surely has to save those cancelled “cult shows”. You know, buy up the rights for the Firefly, Terminator the Sarah Connor Chronicles, SGU, soon to be cancelled V, etc. Mostly Firefly, of course, as people are still bitter about the whole cancellation due to puny ratings.

But will the Netflix really be that viagra for mass market rating disfunction? I kinda doubt it. As that Serenity movie showed (by opening at number 2 with 10 million dollars), in most cases “cult” label gets assigned for having hyperactive but small fan base. People are vocal for the cause, but, unfortunately, there are simply not enough of them to produce a real blockbuster show on the first run, instead of re-runs.

And the problem with sci fi shows in general seems to be simply relatively low return on investment. Presuming that Netflix goes for Firefly Resurrection, it will cost them about $4 million dollars per episode (I’m taking current estimation of costs of Fringe, which is nicely done, though it doesn’t always include huge amounts of special effects). Pilot of a new season will probably be $10 million. Assuming an average season – 20 episodes, that’ll be roughly $90 million.

Further let’s presume there will be 4 episodes per month (yes, you’ll have to wait for Friday to stream new Firefly episode, for costs’ sake) — $16 million per month. And that’s for exactly one TV show.

Netflix right now has 20 million members. Old statistics from 2009 is probably not accurate any more, but with introduction of streaming-only plans I will presume that there will be roughly 50% of users on streaming only plans (in reality it’s probably less, but let’s sum up those users that have both DVDs and also stream a bit into this number). 10 million monthly customers dedicated to streaming, paying $7.99 a month.

According to earning ratios statistics they have 53% profit margin (oversimplification, yes, but let’s presume they payed for everything else, and this is what they have). That gives us roughly 42 million dollars per month.

Congratulations, you’ve just blew 38% of all profit to please Firefly fans. And there are probably not 10 million of them as Nielsen ratings claimed there were 4.48 million people watching the TV series.

That means picking up 3 TV series to be saved will have wiped all of Netflix’ profit down to zero. Are you sure this will happen?
Are some of my assumptions are overly pessimistic? I don’t know, write a comment with corrected data. But with current numbers the only thing they can buy is a relatively low cost TV show with minimal special effects and high viewership. Hence I believe that if Netflix were to get into this business of “saving shows”, the economics will have to be altered dramatically.

For example, they could introduce individual show fees. You want Firefly to be saved? That’s $16 million divided by the number of subscribers please (plus standard $7.99 streaming which will be the basic plan). Suddenly you’re looking at significantly closer to cheap basic cable plans (used to be around $20 a month), but without all the other channels (amount of streaming content is still less than that torrent of shows you get). Or get sponsors, which would take them in Hulu’s direction (or make captain of the ship use only very specific kind of razor to shave on each episode with logo prominently showing for at least 35 seconds of screen time)

I guess if they can pull out something like that, it would be the ultimate test of fan base loyalty. If you can collect enough money, you get your shows. And if such schema were to become reality, that would be truly viewership-driven television. For now, don’t get your Firefly hopes up.

Leave a Reply