Too Much TV: Your TV Talking Points For Tuesday, April 5th, 2022

Every time I try and get away, they suck me back in....

Here's everything you need to know about the world of television for Tuesday, April 5th, 2022. 

I KEEP PROMISING MYSELF I WON'T GET SUCKED INTO THIS ARGUMENT AGAIN...
Just like clockwork, every few weeks there is another round of "Netflix should run advertising" pieces and because it's a pet subject for a lot of media industry journalists, the pieces always get a lot of attention. And every time they do, I find myself writing about it again here, because I am one of the few journalists who pushes back hard against the idea.

I'm not arguing that Netflix will never add advertising. I just think that most of the reasons being cited for why Netflix should include ads fundamentally misunderstand Netflix's business model, especially when it's compared to some of its rivals.

I keep promising myself that I won't get sucked into the conversation yet again, but a recent think piece by Ben Thompson in Stratechery is being shared all over social media and there is an amazing amount of groupthink agreement along the lines of "see, I told you Netflix is going to include advertising.”

I honestly don't have the will to go through all of the ways that I believe Thompson is misguided, so let's just stick with the highlights...

Thompson begins by highlighting a recent piece in The Information which mentioned two different concerns at Netflix: overall costs at the streamer and slowing subscriber growth in North America. And Thompson offers up this solution:

These are presented as two different issues, but there is a connection between them: Netflix should be hiring more people — a lot of them — and those people should be building a product that increases subscriber numbers and revenue. That product is advertising.

This solution makes sense if the cost of a Netflix subscription is the primary reason why the people who aren't currently subscribed to Netflix have opted not to join. While I haven't seen any public polling on this topic, as a whole, cost is not the primary reason why people decide to subscribe (or unsubscribe) from a streaming service. It's new and engaging content.

In Friday's newsletter, I mentioned a new study from Park Associates that concluded that about 32 million American streaming subscribers are "service hoppers." In other words, people who subscribe and then cancel a few months later and/or jump between streaming services. And the cause for that churn? This chart lays out the top reason and while cost is a factor, it's not the top one.

So is the cost of a Netflix subscription a factor in a slowing subscriber growth and/or subscriber churn?

Based on outside metrics, that doesn't seem to be the case. Netflix has the lowest churn numbers in the industry and it seems to be slightly less affected by the "hey, there's a new show, I must subscribe" issue that plagues services such as Paramount+.

Netflix's biggest challenge when it comes to subscriber growth isn't cost, it is market saturation and Thompson does mention that in his piece:

The bigger problem, though, is saturation: Netflix has 75 million subscribers in the US and Canada, where there are around 132 million households. That is nearly as many subscribers as linear TV (84 million), and once you consider shared passwords, penetration may be higher.

But his answer to market saturation is advertising. Specifically, using advertising to lure in people unwilling to pay full price for Netflix:

First, an advertising-supported or subsidized tier would expand Netflix’s subscriber base, which is not only good for the company’s long-term growth prospects, but also competitive position when it comes to acquiring content. This also applies to the company’s recent attempts to crack down on password sharing, and struggles in the developing world: an advertising-based tier is a much more accessible alternative.

Second, advertising would make it easier for Netflix to continue to raise prices: on one hand, it would provide an alternative for marginal customers who might otherwise churn, and on the other hand, it would create a new benefit for those willing to pay (i.e. no advertising for the highest tiers).

Third, advertising is a natural fit for the jobs Netflix does. Sure, customers enjoy watching shows without ads — and again, they can continue to pay for that — but filler TV, which Netflix also specializes in, is just as easily filled with ads.

As I said, this deserves more time than I have today (this newsletter is already late), but there are a couple of problems with this approach. 

The first is technical. Ad tech is insanely complicated and to retain its credibility with subscribers, Netflix would have to build it from scratch. It's not that Netflix can't do it, but it's a much more complex process than people realize. Netflix can't just slap a bunch of programmatic ads into the service and call it a day. Those ads are a notoriously unfriendly experience for subscribers and providing a first-class viewing experience - which would include top-flight advertisers - is a multi-year effort that could easily cost hundreds of millions of dollars. Especially when you have to do it across a global service with multiple territories, languages and ad markets. People who argue "Netflix should just add advertising" have no idea of the complexity they are adding into a service which is the industry leader for tech that works every single time.

There are also big questions about how much a cheaper, ad-supported service would add to Netflix's bottom line. Sure, there is some number of people who aren't currently subscribers who will sign on for an ad-supported version of Netflix that costs $8-$10 per month. But how many people who are now paying the current subscription price would just trade down? There are ways to try and slow that movement by limiting an ad-supported service to one concurrent viewer at a time. But having spoken to company executives several times in recent years, I can tell you that this collapse of the market for full-price subscribers is a real worry.

That isn't to say that Netflix wouldn't do some sort of FAST-type channel that could be advertising-supported and placed on the leading AVODs. That idea has been seriously considered over the past 18 months and I've been told on background that it still might be happen. But a Netflix FAST channel would only include older content in an effort to preserve the viewing experience of subscribers who pay full price.

One of the arguments you hear from people who are pitching the idea of an ad-supported tier is that Hulu is apparently making more from advertising per subscriber than it is from the monthly fee. Part of that is a function of the fact that so many of Hulu's subscribers get the service at a discounted price. But Hulu is also much more successful with its ad-supported tier than any of its rivals. In part, because it has had more than a decade to perfect the process. But also because the bulk of Hulu viewership continues to be reruns of network programming. And viewers are much more open to ad breaks in content that included ads when it originally aired.

I have some more thoughts I’ll flesh out in upcoming newsletters. But in the meantime…

Do you have thoughts on this? Email me at rick@allyourscreens.com and I'll include some of them in tomorrow's newsletter.

FOX ANNOUNCES ITS SUMMER PREMIERE SCHEDULE
Yes, even though there is still a bit of snow on the ground here in Minnesota, Fox announced its summer lineup today:

Sunday, May 1st: Duncanville season premiere
Thursday, May 5th: Call Me Kat season finale
Wednesday, May 11th: Domino Masters season finale
Monday, May 16th: 9-1-1 season finale; 9-1-1 Lone Star season finale
Tuesday, May 17th: The Resident season finale 
Wednesday, May 18th: The Masked Singer season finale; So You Think You Can Dance season premiere
Sunday, May 22nd: The Simpsons season finale; The Great North season finale; Family Guy season finale
Monday, May 23rd: Don't Forget The Lyrics! season premiere; Beat Shazam season premiere
Tuesday, May 24th: Name That Tune season finale
Wednesday, May 25th: Masterchef season premiere
Thursday, May 26th: Welcome To Flatch season finale
Tuesday, May 31st: Lego Masters season premiere; Fantasy Island season premiere
Thursday, June 23rd: Masterchef Junior season finale

ODDS AND SODS
* If you watched the premiere of the HBO documentary The Invisible Pilot last night, I have a video interview with Phil Lott and Ari Mark, who produced the three-episode show.

* The HBO comedy Barry is returning for its third season on Sunday, April 24th.

* FX’s drama Snowfall has been renewed for a sixth and final season to premiere next year.

* Season two of Physical will premiere Friday, June 3rd on Apple TV+.

WHAT'S NEW FOR TUESDAY
Here's a quick rundown of all the new stuff premiering today on TV and streaming:

Best Restaurant Bet Series Premiere (Food)
Black Dog: Being A Teacher (Netflix)
Bloody Boston: A Mob Is Born (Reelz)
Larry Hoover: King Of The Gangsters (Reelz)
Ronny Chieng: Speakeasy (Netflix)
30 For 30: Shark (ESPN)
Star Trek: The Motion Picture—The Director's Edition (Paramount+)
The Croods: Family Tree (Hulu/Peacock)
Tony Hawk: Until The Wheels Fall Off (HBO)

Click Here to see the list of all of the upcoming premiere dates for the next few months.

SEE YOU WEDNESDAY! 

If you have any feedback, send it along to Rick@AllYourScreens.com and follow me on Twitter @aysrick.