Is Canceling Shows Too Quickly a Mistake? One Industry Exec Thinks So

Over the past several months, companies have been in a mad rush to cancel shows that had already been ordered or renewed and remove others from their respective streaming services in efforts to trim expenses from their bottom lines. Warner Bros. Discovery’s efforts are front of mind, but Netflix, AMC Networks, STARZ, and others have also been guilty of axing and offloading underperforming shows. However, cutting these shows may be a mistake in the long run, at least according to one streaming executive.

“When you look at a lot of the streamers and how they program now its ‘three seasons, eight episodes each season and we’re done,’” NBCUniversal TV’s chairman of entertainment at TV and streaming Susan Rovner said at the South by Southwest festival this week. “So they’re not building those libraries, and I think that’s a mistake. I think that’s going to catch up.”

When it comes to ordering new series and cutting poorly performing ones instead of investing in the shows in an effort to build libraries, Rovner believes that streamers may be sacrificing short-term financial benefits over long-term customers. After all, if every underperforming and costly show is canceled, then several years down the line, streamers may find themselves having very little content to offer subscribers.

Canceling shows that don’t find an audience is part of how television has worked for decades, so that’s not new, but unlike on broadcast and cable, streaming series have the opportunity to continue to drive engagement for years to come, if they are given an opportunity to build a following, even if it is smaller than the company would have originally liked. All too often, streamers would seemingly rather cancel a show that is not a hit immediately and move on to another show that can be an instant smash for the service.

“Everything right now is so driven by subscriptions and getting as many subscribers as possible and that’s why people are going after the shiny and new,” she said.

Though this is a trend for all streamers, Netflix has been noted for canceling shows very quickly, but the company’s co-CEO Ted Sarandos has said that the service has “never canceled a successful show.”

While this might be true based on the data that the streaming giant uses, it can still have a negative impact on the subscriber base. The streamer has recently canceled popular, but apparently under-watched series “The Midnight Club,” “1899,” “Uncoupled” and “Warrior Nun,” which may be at least part of the reason that Netflix was the most-canceled service in late 2022, according to a recent survey.

Netflix’s cancelation procedures are difficult to argue with, especially given the sizeable chunk of domestic and international streaming that the platform’s titles represent. Five of the top 10 most viewed English-language TV series were on Netflix in 2022, with “Stranger Things” Season 4 and “Wednesday” attracting the most attention with more than one billion hours watched each.

“This business is really completely about engagement, profit, and revenue,” Netflix co-CEO Greg Peters said during the company’s fourth-quarter 2022 earnings call. “We’ve got to grow all of those things and all those things are tied to executing content. When the content’s working, the business is working. We grow engagement; we grow revenue; we grow profit.”

Rovner, though, hopes to get Peacock to a “place that’s not just about new subscriber growth, but it’s also about stopping churn and making sure we’re retaining people.”

Numerous studies on streaming have indicated that new, buzzy titles are what initially draw customers to streamers, but the libraries filled with familiar titles are what keeps them subscribed. However, it’s not that simple. Stopping subscriber churn and retaining customers doesn’t necessarily equate to increased revenue. And as unpopular as some of the cuts may be, the companies behind them are already seeing the benefits.

WBD has taken a lot of flak for its dramatic cost-cutting efforts at HBO Max — as well as at the company overall — but these measures have helped the company’s bottom line. In its most recent earnings call, WBD disclosed Q4 streaming losses of $217 million, a significant decrease from the segment’s $600 million loss reported in the prior quarter. The $217 million deficit for the period was also an improvement of $5.11 million over 2021’s total, prior to the merger of Discovery and WarnerMedia.

Disney and Peacock both disclosed fourth-quarter streaming losses of over $1 billion. As a result, things are not as bad for Warner Bros. Discovery as they probably would have been without the controversial actions. Of course, it’s important to note that Netflix and HBO Max are in a different boat than Peacock. Netflix has nearly 231 subscribers worldwide, and Warner Bros. Discovery has 96 million streaming subscribers globally across HBO Max and discovery+. Peacock has a mere 20 million aid subscribers, a total which is more than double where it was a year ago.

Moreover, Netflix and HBO Max already have established brands, while Peacock is still trying to figure out what kind of content it wants to offer. Therefore, it makes sense that Netflix and HBO Max can be more decisive in canceling underperforming shows because they know their brand and audience better than Peacock does, which is still finding its footing.

In the end, it’s a balancing act. Canceling so-called underperforming shows too early may make sense financially, but it could also drive away current and future subscribers who are looking for something else after they finish the show that they initially signed up for. Conversely, keeping an expensive and poorly-watched show on air just because a small, but passionate, group of viewers like it means that the company will likely lose even more money.

“We talk a lot about it, especially when you do a show that is heavy mythology that really needs a beginning, a middle and then hopefully needs to have that end,” Rovner said of Peacock. “You want to honor your viewers who have invested in that show and give them that end and, unfortunately, sometimes that means making the decision to order more episodes of a show even though financially it may not make as much sense. But you are gaining trust with your viewers and your audience and your consumer.”