This morning, for the first time ever, Netflix's chief content officer Ted Sarandos — the man who essentially serves as the streaming service's programming head — appeared for a press conference at the Television Critics Association winter press tour. (For more on what this event is and why I'm there, see here.) Netflix has appeared at the event before, but Sarandos hasn't opted for the sorts of executive sessions typical of other major networks.
There's good reason for this, actually. Unlike the broadcast and cable networks, Netflix is not bound to release any real data beyond raw subscriber numbers, which it does in quarterly earnings statements. It doesn't have to say how many people are watching its shows or what the demographics of those viewers are.
Thus, it has much of the programming freedom of a pay cable channel like HBO — in that it can pick up shows that appeal only to niche demographics without having to answer questions about why the network continues to support those shows, despite their anemic ratings. (HBO, for instance, just picked up the low-rated series Girls for a fifth season before the fourth season even debuted, largely because the show reaches a demographic that doesn't have a lot of other natural draws on the network.)
But not having hard data also necessarily means that any discussion with Sarandos will turn into a discussion of the refusal to release that data. Though the executive released a slew of premiere dates and announced a Marco Polo renewal, most questions were about why the streaming service refuses to release numbers and what its various programming strategies are. His answers don't just speak to Netflix in general, but to the future of television as a whole.
Why Netflix doesn't release viewer numbers
The chief reason Netflix doesn't report ratings numbers is because it isn't beholden to either advertisers or cable companies. It doesn't have to charge different rates, based on the demographics of the audience watching or when those viewers are watching the program.
The most demographically desirable audience to a broadcast network (and its advertisers) is upscale, young professionals, usually white. (Men, who watch less television than women, on average, are also at a premium.) You can see how the networks have slowly gravitated toward this audience in what they put on the air, too. The same is true, to a lesser degree, for cable channels.
But it's largely not true for Netflix. All Netflix cares about is whether it can get you to pay a subscription fee for its content. If you're paying only to watch one of its original programs in particular, then, paradoxically, that program becomes even more valuable.
If, say, Marco Polo only has 200,000 viewers (a massively small audience for a network or cable show), but every one of those viewers is only watching Marco Polo, then a renewal still makes sense. That scenario is obviously unlikely, but it's the most extreme example of how the service handles questions of renewal and cancellation differently from a traditional network.
Consider, also, the fact that Netflix picked up A&E's canceled series Longmire, along with AMC's canceled series The Killing. Demographically, neither series made sense for their networks, Sarandos said. This probably means they skewed too old. But both shows had dedicated audiences, who are fairly likely to grab Netflix subscriptions just to watch new seasons. That, again, is a win for Netflix.
But this also speaks to the danger of the Netflix way of thinking — or, really, the modern television way of thinking. Because when it comes right down to it, what Netflix and a lot of places (including many traditional cable networks) are saying is that the idea of a show is more valuable than the show itself.
TV shows as advertisements
During the press conference, Sarandos said, "You don't have shows that penetrate the culture at the level that these shows have had without having a lot of people watching."
This is probably true! It's hard to imagine the impact Orange Is the New Black and House of Cards have had without lots and lots of people watching. But "lots and lots" is increasingly a variable number.
Sarandos was even pressed on this point, when asked about HBO shows that have clearly penetrated the culture, without a lot of viewers. Again, think of Girls, a show that has been written about and discussed essentially everywhere, while basically petering out around 1 million viewers for its most-watched first-run episodes. Sarandos's answer was that HBO had maybe penetrated the consciousness of people on the coasts, but not all over the country, like Orange had. And maybe he's right! But we'll never know.
The simple fact of the matter is that 1 million viewers is still a lot of people if they're amplifying the name of your show over social media and in the traditional media (which occasionally seems fueled by think pieces about Girls and Netflix shows). It's a drop in the bucket of traditional viewership metrics, but that doesn't matter if you can see them all as free marketing.
And that's really what's happening here. Just like a traditional cable channel, Netflix makes most of its money by luring in people to watch reruns of things that came from other networks. In December, CBS's David Poltrack claimed that the two most popular shows on Netflix are The Blacklist and Once Upon a Time, both big network hits that people probably want to catch up with in their spare time. (Indeed, Netflix paid a staggering $2 million per episode for The Blacklist.)
We'll never know if Netflix turns a profit on House of Cards or Orange Is the New Black. And even 10 years ago, that would have been seen as suspect. But we've grown so used to the idea of original programming serving as a loss leader that gets you in the door to watch the stuff the network actually makes money on that this now makes a perverse sort of sense. Orange Is the New Black isn't just a TV show; it's, in a very real way, an advertisement for Netflix as a programming brand. And that makes it, in some ways, invaluable.
Similarly, Netflix's upcoming Unbreakable Kimmy Schmidt, Tina Fey and Robert Carlock's follow-up to 30 Rock, was destined for a quick cancellation on NBC, but it can live forever on Netflix, where being in business with someone like Tina Fey is almost certainly of premium value.
I don't expect that this era of the idea of shows being more valuable than the shows themselves can last forever, but it's working very well for Netflix and Amazon, right now. The same even goes for HBO, which refuses to announce numbers for its own online service. The world of TV is just a stark reminder of the pop cultural world of 2015. There is no mass audience anymore, just a series of niches, some larger than others.