Netflix Is Hoping Backend Payments Will Help Improve Quality of Shows
It’s lonely at the top, but that’s the dilemma Netflix faces as the world’s largest streamer. The lack of competition for that title has left Netflix with plenty of time to experiment, including potentially borrowing the strategies of other streaming services like Apple TV+. That streamer’s parent company has reportedly considered changing the way it pays for streaming original TV shows and movies to reward better quality productions and save money upfront. A new report from Bloomberg's Lucas Shaw indicates that Netflix is considering doing the same.
Key Details:
- Netflix wants to pay creators less initially, and more on the back end if their shows turn out to be a success.
- The streamer has already made several film deals along this line but denies it wants to do the same with TV.
- Shows like “Bridgerton” could see bigger financial windfalls if the new system is implemented.
Apple TV+’s formula of payments rewards shows that get renewed for future seasons. Currently, two shows that are picked up for additional seasons essentially receive the same financial payouts regardless of audience size. However, in May reports emerged that Apple was looking to change those arrangements. Instead, it wanted to shift to a formula that allowed it to pay less upfront, but potentially more on the back end for shows that drove impressive viewership metrics.
Shaw reports that Netflix is considering something very similar. It has already made a few movie deals based on this deal structure, and Shaw reports that multiple sources have told him the company wants to do the same with its TV productions. Officially, however, Netflix denied that it wanted to change the way it makes TV deals.
Even the largest and the most profitable streamer in the world — as Netflix is — must be careful about throwing its money around. The company is constantly shifting budgets to send money where it will be used most successfully; for example, for the first time in 2024 Netflix will spend more money to make shows outside the United States than it will on domestic productions. Paying out more money for successful shows and movies once they’ve proven themselves could lead to better quality titles and less pricey flops for Netflix and other streamers who adopt this strategy.
As Netflix’s most recent data dump showed, British-made shows could be a big beneficiary of the new payment structure if the service does decide to make a switch. British TV shows dominated the first half of 2024 for Netflix in terms of viewership; “Bridgerton” had three seasons in the top 15 most-watched shows for the streamer, and would potentially be in line for a big payout after generating that much audience excitement if Netflix does change up the way it rewards shows for success.
Could other media companies decide to charge Netflix more for shows they license to the service? Titles like “Young Sheldon,” “Suits” and “Brooklyn Nine-Nine” are all over the top 100 list of Netflix’s most-watched programs, as are kids shows like “CoComelon” and “Peppa Pig.” If Netflix decides to change up its payment formula, perhaps the companies that own these shows will ask for a similar change, perhaps in the form of a bonus if their titles surpass a certain viewership benchmark on Netflix.
The company could still decide not to make wholesale changes to its TV commissioning payments, but if Netflix does decide to lift that strategy from Apple other media companies could soon follow suit. Everyone in Hollywood besides Netflix is still trying to make streaming consistently profitable, and the ability to pay out more on the backend for successful shows could lead to better quality titles and more loyal subscribers.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.