Why shows leave Netflix

To look at the list of shows leaving Netflix, April 2017 is going to be a bloodbath.

Buffy is leaving. Scratch that — the complete TV works of Joss Whedon are leaving (save Dollhouse, season two). Better Off Ted is leaving. Ally McBeal is leaving. The X-Files is leaving.

Go through that list, though, and you’ll see that most of the shows leaving the service have one thing in common: They’re 20th Century Fox productions. It seems as if a deal Netflix made with Fox — probably in 2010, given the parameters of which seasons of which shows are leaving the service — is expiring in April and taking many of your favorite shows with it.

This has happened before, with other series, and Netflix often quietly renegotiates new terms a few weeks later, and the show is restored to its catalog. (Doctor Who is a prominent recent example of both sides of the Netflix negotiation coin — it briefly left the service in 2015, before renegotiations brought it back, but then it migrated to Amazon Prime in 2016.) But as we head into a world with more and more streaming options, this is just going to keep happening.

Indeed, the future of Netflix is probably not in streaming reruns of your favorite classic shows — and the service seems to know it.

Netflix struck a lot of deals when nobody knew the value of streaming shows

Netflix

At first blush, it’s a little weird that Fox has licensed this many shows to Netflix to begin with. The company is a co-owner — with ABC and NBC — of Hulu, which has copious amounts of old Fox shows to stream (including much better Buffy transfers than Netflix has, including the full version of the musical episode “Once More With Feeling,” as opposed to the shorter syndication cut Netflix has). An inevitable retrenchment around Hulu is probably in the near future for these companies.

The important thing to remember about Netflix — and Hulu and Amazon and other streaming services — is that they own almost none of the content they air. Instead, they license it from other studios and production companies, and those licensing deals carry expiration dates.

Netflix built its reputation around having a massive streaming library — but only because at the time it was building that massive library, many studios didn’t think there was much appetite for streaming entertainment. So they licensed programs to Netflix for a relative pittance. Now that it’s clear there’s an appetite for streaming, they’re being much more judicious, and Netflix is forced to pay out more and more. (For instance, the service paid a blockbuster $2 million per episode a few years ago for the rights to The Blacklist. And that money was worth it. Blacklist appears to be one of Netflix’s most watched shows.)

This explains Netflix’s ongoing forays into producing its own shows, something it seems to be focusing on much more than securing streaming rights to programs from other networks. (Indeed, the total number of programs available on the platform has been cut in half in just the past five years.) Though Netflix owns almost none of its original shows, it can close licensing deals that are much more generous in terms of the amount of time it has exclusive rights to stream those shows. And yet it can’t close off studios from, say, producing DVDs of those shows — which is why you can buy copies of House of Cards or Orange Is the New Black in stores.

More and more of Netflix’s old licensing deals are going to expire in the next few years, with studios and production companies seeking more money for their programming and Netflix looking to invest more of its money in original content. Due to its ties to major broadcasters, Hulu may end up the beneficiary here, but it’s hard to say for sure. Sometimes, an upstart will snag streaming rights — as when FX Networks grabbed the rights to The Simpsons, whose past seasons are available on no major streaming platform but are on “Simpsons World,” a standalone streaming service under the FX umbrella.

This is why, ultimately, cord-cutting will probably end up costing subscribers about as much as a cable bill does. At present, you can get by with just one or two major streaming services and still have access to most of your favorite shows. But as streaming becomes more and more of Hollywood’s business strategy, there will be less and less incentive to sign sweetheart deals that license big shows like Buffy to streaming services for less than they’re worth. In the very near future, your favorite shows could well be scattered across 10 to 15 services — and that’s before we factor in live events like sports and news.

None of this means Netflix is going anywhere. It’s a massive entertainment company at this point, and its decision to invest primarily in its own programming is a smart one. But it does mean that the brief window of Netflix having most of the stuff you wanted to watch is all but closed.

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