3 ms·

This article doesn't really explain the "why". The title is very misleading.

by polski-g 3y ago

rwmj 3y ago
In particular, why remove existing shows from streaming services. How does that affect accounting?
- readthenotes1 3y ago
  I'm sure there are other reasons but at least it drives viewers to other shows that they want us to watch.
fullshark 3y ago
Seems like the economic logic of streaming has changed, and this article failed to explain how, merely hint at it.
- kmeisthax 3y ago
  The economic logic of streaming never changed, it's just that it never made sense. All of the decision making for what shows get made require, at a minimum, some kind of attribution for what people actually want to see, and remuneration commensurate with that attribution. That attribution and remuneration also needs to be transparent so that everyone involved in the production can negotiate their value. In movies, the attribution was ticket sales, later home video rentals and sales. TV was attributed with Nielsen numbers and ad spend. Streaming doesn't work this way: they don't sell ads[0], and they don't charge per view, they just charge a flat fee. How that flat fee gets remunerated to the producers of the shows and movies on their platform is a complicated mess. Attribution could be done with view counts, except streaming services have been very notoriously cagey with those numbers. In fact, part of the reason why SAG-AFTRA is getting stonewalled on streaming is that nobody in the industry wants those numbers to be public. What happens if you don't get attribution is that the actual creative work gets devalued. You can see this in the wording that the streaming services use: they no longer show movies or TV shows, but "content" - i.e. entertainment slurry. The value of their service is not in the creative work it can provide to you but the delivery mechanism used to get it there. It's a weird parallel to the net neutrality arguments of yesterdecade, where ISPs didn't want to be 'dumb pipes', but instead actively managing the traffic of their users. And to be clear, streaming services do a lot of active management. I suspect that if SAG-AFTRA wins, a lot of really embarrassing reports will come out suggesting that all these streaming exclusive shows were actually pulling in terrible numbers and that streaming is not nearly as much of a growth market as people thought. [0] Well, up until recently, anyway.
- dv_dt 3y ago
  I would suspect that the companies are shifting to slow release schedules in response to the writers and actors strike.
- prepend 3y ago
  I was hoping to learn more as well. I think the streaming accounting isn’t as directly attributable so it probably means that costs are allocated over long periods because the single show is a very small percentage of the overall library. So you spend $5B on shows and lump them into your library and some are watched and some aren’t, but they all pay out sort of the same. So you amortize that $5B equally over the whole schedule. By removing shows you think won’t get you viewers you amortize the whole cost immediately. But in the olden days revenue was more clearly attributed. So if you payed $5B for 100 shows each and the costs were equal (not really but let’s say) then each show has $50M in costs. You can run them all and when you don’t sell ads then you know they suck and can close those ones down. There’s no risk to run and see because you have revenue for each show. And with old cable, shows paid out based on plays. So you could just not play those old shows. But with streaming, just to have them available for streaming, even if no one views them, they make revenue for tax purposes.
atduskgreg 3y ago
They explain that the benefit to the companies is the tax write off. The part they don’t explain is how little money shows like these generate that they’re worth less than the potential write off. The big semi-open secret in streaming right now is that viewership is a lot lower than people think and much less correlated with show “quality” (where by “quality” here I mean production cost). This is why the whole industry is introducing ad-supported tiers. Look for that to be paired with shows that are radically cheaper to make and payout less to talent in residuals, ie. reality TV. The last decade of streaming has been a big bubble. The economics are fundamentally unchanged from 2008 basic cable so as these services try to actually become profitable expect the content to look a lot more like Toddlers And Tiaras than Westworld and expect to watch a lot more ads.
- throwaway03635 3y ago
  My guess is that it's only going to get worse as each streaming service builds up their exclusive library. As prices and interest rates go up, people will become more concerned about getting value for their money. Having 5 different streaming services will be an increasingly difficult sell. > "viewership is a lot lower than people think and much less correlated with show quality" That doesn't surprise me. Many are probably just turning on the TV due old habits, and keep it on in the background while staring at their phones.
  - atduskgreg 3y ago
    “Second screen content” is one of the biggest buzzwords right now amongst streaming execs.
- fullshark 3y ago
  The streaming boom was what, the last decade? Whenever Netflix started spending on House of Cards? Billions spent on prestige TV shows to acquire market share and they all have seemingly no cultural relevance at all. None will be remembered or cherished 10+ years from now I think. Pretty insane.
  - 3y ago
PopAlongKid 3y ago
They do explain "why", but not in much detail or context. > it was axed as a cost-cutting exercise. >In May, Disney+ announced a content removal plan designed to cut US$1.5bn worth of content, meaning it substantially reduces the company’s value, giving it a lot less tax to pay. Cost-cutting doesn't make sense if it also cuts your revenue to the same degree. I also don't know of any tax that is based purely on the value of the company. Income tax is based on income -- if you make a profit and pay tax, you are still ahead compared to not doing so. More importantly, why do the shareholders tolerate this? Why would they want to "substantially reduce the company's value"?
- atduskgreg 3y ago
  I think the article phrased it sloppily. I think what’s happening is that the studios write off the cost of the production as a loss and they can only do that if they don’t have them available to stream where they could in theory generate revenue in the future. The phrase about “the company’s value” is just sloppy/mistaken here. The reason it makes sense for the studios to remove these shows for the minimal benefit represented by a lowered tax burden is that the shows generate shockingly little viewership let alone revenue. The mechanism for the relationship between those things is pretty fuzzy in a subscription-based world in the first place, Did a single viewer signup for Netflix or decide not to cancel their subscription because of The Irishman, for example? That movie cost Netflix something upwards of $160 million. It made $8 million in its theatrical release. Is there any world where the remaining cost was made up for by new or retained streaming customers? I highly doubt it. This is why the whole streaming industry is moving to ad-supported and low cost reality content. And why the services are fighting the WGA demands to release streaming viewership numbers as part of paying writers residuals. It’s not the cost of the residuals. It’s the numbers. If streaming viewership numbers were public Netflix stock would go to 0 the next day.
gwbas1c 3y ago
I think the bigger "why" is that there's a huge glut of content: There's waaaaay more TV than I could ever hope to watch. For awhile, every time I opened Netflix it was promoting a new series with a full season. Part of the reason why I won't bother with "new" streaming services is that I don't want "yet another subscription," but the other reason is that I simply don't have time to watch all that TV.

This article doesn't really explain the "why". The title is very misleading.

rwmj 3y ago

In particular, why remove existing shows from streaming services. How does that affect accounting?

readthenotes1 3y ago
I'm sure there are other reasons but at least it drives viewers to other shows that they want us to watch.

fullshark 3y ago

Seems like the economic logic of streaming has changed, and this article failed to explain how, merely hint at it.

kmeisthax 3y ago
The economic logic of streaming never changed, it's just that it never made sense. All of the decision making for what shows get made require, at a minimum, some kind of attribution for what people actually want to see, and remuneration commensurate with that attribution. That attribution and remuneration also needs to be transparent so that everyone involved in the production can negotiate their value. In movies, the attribution was ticket sales, later home video rentals and sales. TV was attributed with Nielsen numbers and ad spend. Streaming doesn't work this way: they don't sell ads[0], and they don't charge per view, they just charge a flat fee. How that flat fee gets remunerated to the producers of the shows and movies on their platform is a complicated mess. Attribution could be done with view counts, except streaming services have been very notoriously cagey with those numbers. In fact, part of the reason why SAG-AFTRA is getting stonewalled on streaming is that nobody in the industry wants those numbers to be public. What happens if you don't get attribution is that the actual creative work gets devalued. You can see this in the wording that the streaming services use: they no longer show movies or TV shows, but "content" - i.e. entertainment slurry. The value of their service is not in the creative work it can provide to you but the delivery mechanism used to get it there. It's a weird parallel to the net neutrality arguments of yesterdecade, where ISPs didn't want to be 'dumb pipes', but instead actively managing the traffic of their users. And to be clear, streaming services do a lot of active management. I suspect that if SAG-AFTRA wins, a lot of really embarrassing reports will come out suggesting that all these streaming exclusive shows were actually pulling in terrible numbers and that streaming is not nearly as much of a growth market as people thought. [0] Well, up until recently, anyway.
dv_dt 3y ago
I would suspect that the companies are shifting to slow release schedules in response to the writers and actors strike.
prepend 3y ago
I was hoping to learn more as well. I think the streaming accounting isn’t as directly attributable so it probably means that costs are allocated over long periods because the single show is a very small percentage of the overall library. So you spend $5B on shows and lump them into your library and some are watched and some aren’t, but they all pay out sort of the same. So you amortize that $5B equally over the whole schedule. By removing shows you think won’t get you viewers you amortize the whole cost immediately. But in the olden days revenue was more clearly attributed. So if you payed $5B for 100 shows each and the costs were equal (not really but let’s say) then each show has $50M in costs. You can run them all and when you don’t sell ads then you know they suck and can close those ones down. There’s no risk to run and see because you have revenue for each show. And with old cable, shows paid out based on plays. So you could just not play those old shows. But with streaming, just to have them available for streaming, even if no one views them, they make revenue for tax purposes.

atduskgreg 3y ago

They explain that the benefit to the companies is the tax write off. The part they don’t explain is how little money shows like these generate that they’re worth less than the potential write off. The big semi-open secret in streaming right now is that viewership is a lot lower than people think and much less correlated with show “quality” (where by “quality” here I mean production cost). This is why the whole industry is introducing ad-supported tiers. Look for that to be paired with shows that are radically cheaper to make and payout less to talent in residuals, ie. reality TV. The last decade of streaming has been a big bubble. The economics are fundamentally unchanged from 2008 basic cable so as these services try to actually become profitable expect the content to look a lot more like Toddlers And Tiaras than Westworld and expect to watch a lot more ads.

throwaway03635 3y ago
My guess is that it's only going to get worse as each streaming service builds up their exclusive library. As prices and interest rates go up, people will become more concerned about getting value for their money. Having 5 different streaming services will be an increasingly difficult sell. > "viewership is a lot lower than people think and much less correlated with show quality" That doesn't surprise me. Many are probably just turning on the TV due old habits, and keep it on in the background while staring at their phones.
- atduskgreg 3y ago
  “Second screen content” is one of the biggest buzzwords right now amongst streaming execs.
fullshark 3y ago
The streaming boom was what, the last decade? Whenever Netflix started spending on House of Cards? Billions spent on prestige TV shows to acquire market share and they all have seemingly no cultural relevance at all. None will be remembered or cherished 10+ years from now I think. Pretty insane.
- 3y ago

PopAlongKid 3y ago

They do explain "why", but not in much detail or context. > it was axed as a cost-cutting exercise. >In May, Disney+ announced a content removal plan designed to cut US$1.5bn worth of content, meaning it substantially reduces the company’s value, giving it a lot less tax to pay. Cost-cutting doesn't make sense if it also cuts your revenue to the same degree. I also don't know of any tax that is based purely on the value of the company. Income tax is based on income -- if you make a profit and pay tax, you are still ahead compared to not doing so. More importantly, why do the shareholders tolerate this? Why would they want to "substantially reduce the company's value"?

atduskgreg 3y ago
I think the article phrased it sloppily. I think what’s happening is that the studios write off the cost of the production as a loss and they can only do that if they don’t have them available to stream where they could in theory generate revenue in the future. The phrase about “the company’s value” is just sloppy/mistaken here. The reason it makes sense for the studios to remove these shows for the minimal benefit represented by a lowered tax burden is that the shows generate shockingly little viewership let alone revenue. The mechanism for the relationship between those things is pretty fuzzy in a subscription-based world in the first place, Did a single viewer signup for Netflix or decide not to cancel their subscription because of The Irishman, for example? That movie cost Netflix something upwards of $160 million. It made $8 million in its theatrical release. Is there any world where the remaining cost was made up for by new or retained streaming customers? I highly doubt it. This is why the whole streaming industry is moving to ad-supported and low cost reality content. And why the services are fighting the WGA demands to release streaming viewership numbers as part of paying writers residuals. It’s not the cost of the residuals. It’s the numbers. If streaming viewership numbers were public Netflix stock would go to 0 the next day.

gwbas1c 3y ago

I think the bigger "why" is that there's a huge glut of content: There's waaaaay more TV than I could ever hope to watch. For awhile, every time I opened Netflix it was promoting a new series with a full season. Part of the reason why I won't bother with "new" streaming services is that I don't want "yet another subscription," but the other reason is that I simply don't have time to watch all that TV.