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Chapter!7

Netflix.com might go down in TV history as the single most important company that disrupted and rewrote television in the twenty"first century. An exaggeration? Consider this: the decade"old service is the world’s largest streaming TV network and the largest internet media and entertainment business with over 120 million paid subscribers. Often described as the “800"lb. gorilla in the room” in the board- rooms of the media industry in 2010s, the company represents a central shift in what constitutes television. As part of what Amanda Lotz (2018) calls the “post TV” period, “the new Netflix order” (Brueggemann 2017) moves TV from a mass medium to a more narrowly consumed form with a much greater array of programs and tastes fueled by the logic of the internet. By 2016 The Hollywood Reporter was predicting that Netflix and Amazon Prime meant the end of the Hollywood studio system (Galloway 2016). In March 2018 speaking about streaming, film director Steven Spielberg warned: “Television is really thriving with quality and art, but it poses a clear and present danger to filmgoers” (Dalton 2018). The streaming net- works offer more money, greater creative license and a willingness to produce more individuated programs and films than the American film industry. Given that, why would anyone not want to work in the diverse and creative world of streaming?

The Technological Shift

The possibility of streaming media really only started in the 1990s with the prolif- eration of personal computers. A further step arrived with the technology that offered enough CPUs (central processing units) and bandwidth (a speed minimally

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of 2 Mbit/s or bit rates) to keep the video or audio from buffering. In the early 2000s, broadband penetration increased allowing a majority of Americans access to the internet. Then Adobe Flash standardized the streaming formats as well as the method of delivering commercial media to personal computers connected to the internet. And HTML5! –! the central markup language used for constructing and displaying web content!–!was adopted. Smartphones and their connection to the internet had become ubiquitous by 2010. In 2012 Netflix built its own custom con- tent delivery system (CDN) that cleaned up the process that gets the data from their company to the users for a smoother viewer experience known as the “last mile.” Like water running from a tap, streaming TV flows program data from a website directly to the user’s computer!–!no intermediary and no need to store it on a digital video recorder or your computer. The programs are there to be watched and rewatched whenever, on the viewer’s terms. This “over"the"top” (OTT) service, whereby the content provider distributes over the internet, represents a major tech- nological change in the content and form of what television is from the eras of broadcasting and cable. Streaming was finally commercially viable and television was no longer a living room occurrence, but rather a where"the"computer"is phenomenon.

The Business of!Streaming TV

Much like the “big three” broadcast networks of ABC, CBS, and NBC in the 1950s, in the 2010s the TV streaming industry started to consolidate into the “big three” of TV companies: Netflix, Amazon Video, and Hulu (see Table!7.1 for information on US"based streaming services). YouTube, Apple, and Facebook Watch stand as the “three minors.” But as much as there was a clear pecking order of streaming compa- nies by 2018, Netflix’s success ignited a battle for the next big streaming service with every major TV and internet companies vying to get into the business. Small niche streaming services such as Crunchyroll, Mubi, Fandor and Shudder keep growing. Traditional big media corporations have responded by consolidating, e.g. Disney’s successful takeover battle against Comcast for 21st Century Fox and AT&T’s pur- chase of Time Warner in attempt to marry corporate might with content providers. The creation of Disney’s streaming service in 2019 changed the streaming industry. It took back its all"important films from Netflix. As the world’s largest media corpo- ration, Disney is the emergent fourth major and possibly the biggest streaming net- work with its vast possibilities of in"house productions and its established hits in film (e.g. Pixar animation) and television (e.g. ABC and cable Disney channels). But it will be hard to catch up with Netflix, given the latter’s head start, global role, and unbridled spending in producing TV and film.

Netflix is the “first network” of streaming in terms of size, audience, and array of original programs. It is more focused on TV series than its rivals Hulu and Amazon. Its library and global viewership in 2018 dwarfed that of any competitor!–!nearly

Table 7.1 Streaming services for!seven US"based companies in 2018.

Monthly Fee

$10.99 standard $7.99 basic $13.99 premium

$8.99 prime video only $12.99 Amazon Prime

$7.99 $11.99 no commercials $39.99 with live TV service

$11.99 TBD Free Free (advertising"based video"on"demand service)

Subscribers 130.1 million (56 million in US)

100 million globally (Amazon Prime) 26 million viewers (Prime Video)

20 million 1.5 million TBD 2 billion users worldwide Approximately 185 million daily active Facebook users in North America

Sony Crackle apps have been downloaded more than 100 million times 5 million monthly unique visits

Content Spend

$12"13 billion in 2018

$5 billion in 2018 $2.5 billion “Hundreds of millions”

$1 billion Up to $1 billion Not revealed

Major Talent Deals

Ryan Murphy Shonda Rhimes Jenji Kohan Barack and Michelle Obama

Nicole Kidman Jordan Peele Amy Sherman"Palladino

Bruce Miller Jason Reitman

No overall deals, but talent includes: Kevin Hart (“What the Fit?”) Will Smith (The Jump”)

Oprah Winfrey Kerry Ehrin

No overall deals, but talent includes: Jado Pinkett Smith Tom Brady

No overall deals, but producers include: Bryan Cranston (“SuperMansion”) 50 Cent (“The Oath”)

(Continued )

Table 7.1 (Continued)

Biggest Success

“Stranger Things” “Orange is the New Black”

“The Grand Tour” “Sneaky Pete”

“The Handmaid’s Tale” “South Park” (off"net)

“Cobra Kai” TBD “Ball in the Family” Mike Rowe’s “Returning the Favor”

“The Oath” “Comedians in Cars Getting Coffee” (moved to Netflix)

Biggest Flop

“The Get Down” “Gypsy”

“Crisis in Six Scenes” “The Last Tycoon”

“Hard Sun” “Youth & Condquesnces”

TBD Its partnerships with controversial information sources

“Sequestered”

Territories More than 190

More than 200 U.S. only 17 TBD Global 20

Original Series

700 globally Approximately 125 domestically

20–25 50 20–25 14 27

Pitch They need a lot of content. You name it, they’ll hear it.

The new executive team is much more invested and looking for bigger, more commercial projects.

The depth of its library and acquired content makes Hulu a must"have for TV fans, and there is attention to every show, given the low volume.

A mix of You Tubers and Hollywood talent, geared toward a young, active audience that’s already on YouTube.

The sky’s the limit, so be there on the ground floor; despite rumors to the contrary, all kinds of programming welcome, including darker fare.

Facebook Watch isn’t interested in doing large prestige dramas; it’s focused on shows that are heavily social and good to watch on mobile.

Ad"supported network allows viewers to watch for free, and originals are supplemented by a library of movies and series.

Awards 43 Emmys out of 225 nominations 2 Oscars out of 14 nominations

10 Emmys out of 66 nominations. 3 Oscars out of 8 nominations

10 Emmys out of 47 nominations

YouTube Premium hasn’t yet been Emmy nominated, although YouTube as a platform has been nominated at least nine times.

TBD No Primetime Emmy nominations yet, although Facebook Watch was nominated for three Daytime Emmys in 2018

5 Primetime Emmy nominations

Table compiled by Michael Schneider from company reports and Variety research. Source: Littleton (2018).

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15 000 titles and 117 million subscribers in 190 countries. Located in Los Gatos, California, it began in 1997 as a California DVD mail rental company as a part of the Silicon Valley technology boom. A decade later it had rented a billion films by mail. With the increase of data delivery speed and lower cost of bandwidth in the 2000s, it became more technologically feasible for the firm to deliver entire films and programs via the internet!–!video on demand (VOD). The company started to stream movies in 2008 across the internet and 10 years later it was consuming one"fifth of all the internet’s entire bandwidth with its streaming (Can Netflix please Investors… 2018).

Netflix does not give the number of viewers for its programs and films. Rather it uses an algorithm to predict audience interests based on the viewing habits of its users and makes recommendations to the individual viewer built on the equation that is not publicly divulged. The company initially divided the audience by geo- graphic communities, gender, and age, much like the Nielsen ratings during the broadcast TV era. But by 2016, the viewers were split into “taste communities” based on Netflix’s belief that audience tastes were more complex than a series of demo- graphic differences. “We have seen that where you live, gender, age and other demo- graphics are not significantly indicative of the content you will enjoy,” a spokesperson for Netflix stated (Rodriguez 2017). These communities drive what Netflix chooses to produce. For example, this author continually gets the recommendation from Netflix for “strong female lead” based on my previous viewings. If a large enough group of viewers continually choose that category, Netflix will produce more pro- ductions for the taste community that prefers strong women leads.

With over 2000 taste communities of viewers who have similar tastes! –! often across international boundaries! –! Netflix has tailored its programs, production, dubbing, marketing, and advertising to them by isolating the specific elements of the series and forefronting them. It has a director of “content localization and quality control” whose team is devoted to localizing its product strategy, which means working with translators to adjust key names and phrases to the locale. Netflix tags all of its content with hundreds of generic terms, which allows it to hone its recom- mendations and marketing to individual users. For example, Stranger Things (2016) would normally be classified as a “science fiction” series, but according to Todd Yellin, head of product, Netflix tags it with “Supernatural. Psychic powers. Missing person. Family in crisis. Conspiracy. It’s also a buddy story” (Laporte 2017). These new categories have the potential to change how viewers might frame the way they understand a series or film!–!much as classic genres (western, horror, and musical) affected how audiences interpreted Hollywood films.

Amazon Video is the “second” streaming network with its 100 million subscrib- ers worldwide. It is the child of Amazon.com!–!the largest internet retail company in the world. The company represents the twenty"first century move to the consolida- tion of a number of businesses under one corporation, similar to the trusts of the early twentieth century, such as Standard Oil and the American Telephone and Telegraph Company. Now we have Facebook, Google, and Amazon. In fact, among

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investors, the big media companies are known as the FAANG group of technology stocks, comprising Facebook, Amazon, Apple, Netflix and Alphabet (Google’s parent)!–!huge media companies that dwarf the competition and cause less inno- vation as a whole. Amazon is not only a retail firm, but a service company with Amazon Web Services and Amazon Cloud, grocery delivery, Amazon Games, Alexa, and Kindle.

Unlike Netflix, streaming and producing media is not the central focus of Amazon Video’s parent, Amazon. It is part of larger package of Amazon goods and services that attract viewers and ultimately customers. In fact, Amazon often tells investors that Prime Video service is just another enticement to get people to sign up for its Prime membership. The video portion was launched as a VOD service in 2006 under title “Amazon Unbox,” signifying how it and the industry in general were moving away from DVDs. Amazon Prime Instant Video is accessed one of two ways as either an extension of “Prime”!–!initially a $79 a year subscription for 1–2"day quick delivery of Amazon goods in 2005. But to compete with Netflix, in December 2016 Amazon added Prime for $12.99 per month or $99 per year. By 2018 Amazon had increased the yearly fee to $119. Prime Video has the edge on Netflix because users are not likely to unsubscribe from Prime because it is tied to its “free” delivery service.

By connecting its streaming service to its established “free” delivery service, Amazon has a built"in audience. The ancillary Amazon services that are bundled into Amazon Prime further differentiate it from Netflix. Beyond the delivery service, Amazon continues to add its other offerings, such as streaming Prime Music, Prime Now with Whole Foods deliveries and discounts, and more as part of its Prime package. According to Amazon, about one"fourth of the Prime sign" ups are primarily for the video streaming!–!five million people in a three"year period. As of early 2016, Amazon Prime Video had nine times more movies than TV series in the US, while Netflix and Hulu carried only twice as many movies as TV shows. In the years since, Netflix has developed its television side over films. In 2018, it had 1569 TV series and the number of movies offered had decreased to 4010.

With a producing budget close to $4.5 billion in comparison with Netflix’s $8 billion, Amazon has not had the “must watch” hits that Netflix has had with its Stranger Things (2016–) and that Hulu has had with The Handmaid’s Tale (2017–). Its greatest success has been The Man in the High Castle (2017) with eight million viewers. As of 2018, Amazon did not have a way of individualizing or personaliz- ing the viewing habits of its viewers in the way Netflix has made famous. Amazon contemplates the total spent on the marketing and the making of a series and con- nects it to the number of new Prime subscribers who chose to watch it to deter- mine the entire cost of each in"house production. This method assumes that these subscribers bought into Prime mainly to watch that show. Netflix knows how much it will pay for the rights to distribute a film based on its algorithm even before negotiations have begun.

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Amazon prefers more commercial and generally popular productions. Bosch, Transparent, Marvelous Mrs. Maisel, One Mississippi, and Grand Tour have been its critical successes. For example, it signed director Jordan Peele (Get Out 2017) to a deal to get a “first look” at his TV ideas, which has resulted in his Nazi hunter drama, The Hunt (2018). Julia Roberts acts in and is executive producer for the thriller Homecoming (2018–), directed by Sam Esmail (Mr. Robot). Nicole Kidman’s produc- tion company is producing The Expatriates (2019) for Amazon. The network has gained the rights to remake The Lord of the Rings for television for $250 million. All these deals reveal how all the streaming networks are under great pressure to have a continuous set of hits so viewers do not sign up for a series that they are interested in and drop their subscription after it is over. Even with Amazon’s tendency to appeal to a larger audience than Netflix, the readiness of the streaming networks to produce a range of series and films has resulted in a greater cultural acceptance of TV as an innovative medium. It is losing its second"class status as the film industry has finally started to flock to television, with the likes of David Fincher, Jordan Peele, the Wachowski sisters and Spike Lee producing online and prompting TV to take on the costs and standards of film industry, but with a much more creative sensibility.

Hulu.com stands as “the third streaming network” in terms of size and influence, with its 20 million US subscribers in 2018. It started streaming in 2006 as the brain- child of media corporate insiders, but did not stream publicly until 2008. What dis- tinguishes Hulu from Netflix and Amazon is its multiple corporate parents!–!initially, 21st Century Fox (30%), Comcast (30%), the Walt Disney Company (30%), and AT&T (10%). It originally signed distribution partnership rights to exhibit media with Comcast, MSN, Myspace, Yahoo and Facebook in 2006. Then it signed a deal with Fox, Disney, and NBC as content providers in 2008. But in 2019, Disney acquired 21st Century Fox and gained controlling interest of 60 % in Hulu, poten- tially giving it a more clearly defined brand.

Hulu has always lacked a clear focus as a streaming company due to its corporate parents having competing views for its future. It was initially a free legacy service. Its distinguishing characteristic is that it streams TV series the day after they air on other platforms. On top of advertising, it added a low monthly subscription fee in 2010 of $7.99. It shows ads before, during, and after the programs, unless you pay $4.00 more a month for its commercial"free option. It streams only domestically. And its programs roll out as an episode a week. As a result, Hulu feels more like clas- sical broadcast TV, but with a much greater offering of programs and movies afforded by a streaming service.

This third network has a large back catalog of TV series and movies, which gives it the aura of a TV nostalgia or legacy network. With a small number of original programs, it is a very different streaming service when compared to Netflix and Amazon with their unprecedented amount of original productions. Its most criti- cally acclaimed original series!–!Casual (2015–2018), Difficult People (2015–2017), and Runaways (2017–)!–!have not created much buzz or general awareness. It was not until 2017 that it produced a culturally significant award"winning program, The

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Handmaid’s Tale, based on Margaret Atwood’s dystopian 1985 feminist novel. With the 20th Century Fox/Disney merger, the streaming industry will most likely position Hulu as the adult network, with Disney as a different streaming network to maintain the family entertainment brand.

The fourth network, YouTube, is instructive not only because it has the largest number of original videos, but also in how it differs from the three top streaming networks. It should be seen chronologically as the first streaming network. Netflix’s move to streaming was inspired by YouTube’s success as a video streaming service. Launched out of a garage by around 320 PayPal employees in 2005, YouTube.com began by allowing users to upload personal videos for general viewing. The ability of users to create videos and upload them onto this video"sharing service differenti- ated YouTube from the other major curated streaming services such as Netflix, which is a platform for professional and known producers.

YouTube’s willingness to host anyone’s video was hailed as the democratization of media!–!no longer were producers controlled by corporations, popularity, and profit to exhibit their work. YouTube represented the new participatory culture of Web 2.0 (Burgess and Green 2009, p. 7). Anyone who had an internet connection and specifi- cally a smartphone with a camera could become a media maker by uploading the video to YouTube and have potentially millions of views. The streaming service still caters primarily to 12–17"year"old teenagers! –! a potentially lucrative market. In 2006, it became the fastest growing company on the internet with over 65 000 uploads and reportedly 100 views per day in July of that year. Its economic potential was substantiated when Google bought $1.65 billion of YouTube’s stock the same year. Time Magazine featured YouTube as “Person of the Year” on its cover in 2006 to signal how it was genuinely changing media culture. The press wrote that the gates to media control were seemingly blown open or, as the New York Times declared in 2012, “On YouTube, Amateur Is the New Pro” (Walker 2012).

The tension between amateur and corporate has defined YouTube’s history. Its videos include commercial fictional programs à la Netflix and Amazon to music videos to channels to “funny stupid videos” by adolescents (best represented by the proliferation of cat videos) to commercially savvy ads. The video"sharing service formed advertising partnerships with NBC, BBC, MGM, Lionsgate, and CBS early on; the companies uploaded their films and programs in exchange for a portion of the profit from ads. In 2007, the website launched its “Partner Program,” which made stars out of unknown producers. Successful amateurs with a large viewership developed into professionals in that they were allowed to earn 55% of the ad revenue on their channels, defined by a group of videos by the same maker.

For example, Ryan Higa and Sean Fujiyoshi with their How to Be Emo, and Zoe Sugg with her Zoella, a fashion and beauty vlog, began as amateurs in 2008. By 2018, they had 10–12 million subscribers and billions of views and they earned over $100,000 a year. These viewings do not rival a program such as NBC’s ER in the 1990s, when episodes had audiences of 25 million viewers weekly (EW Staff 1998). Although these people are the exceptions, they represent how YouTube has monetized amateurism.

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It!underlines the myth of the “little guy” making it, which powers so much of corporate capitalism. Even an animated “annoying talking orange” has succeeded as a web series with over a million subscribers.

This commercialization of amateurs moved YouTube closer to being a commer- cial streaming service for traditional media corporations where amateur video functions as a free product. Slowly, YouTube has moved to becoming “television.” In 2008, YouTube’s receptivity to amateur video narrowed when it shifted to exhib- iting commercially made films and television in agreement with CBS, Lionsgate, and MGM, along with its amateur and “professional amateur” videos. The streamer functions much like the other commercial companies: no matter what the video is, there is an audience regardless of size and thus a potential profit from ads. It is the aggregate of many money"making videos, not one big blockbuster with large profits.

Original Production by Streaming Networks

By 2015, the TV producers began to think that they had produced too much TV (or what John Landgraf of FX called “Peak TV”), with broadcast networks and the pro- liferating cable networks seen as potentially overwhelming viewers with choice. But Netflix proved them wrong. One of its definitive characteristics is the amount of content it has created through “Netflix’s Originals” and distribution agreements. By 2018, it had made close to 700 original series.

As a whole, Netflix does not make its series and films. It signs deals with produc- tion companies. For example, Stranger Things was produced by 21 Laps Entertainment under the guidance of Shawn Levy, and written and directed by the Duffer brothers. Creators find Netflix an attractive partner because of its lack of interference in the production process, in contrast to the legacy networks which have historically over- whelmed producers with endless directives or “notes.” When dealing with the streaming network, both companies share the production costs and cooperate on the cost of distribution. Netflix holds distribution rights in the US and often inter- nationally for a set period of time.

But ultimately the production company owns the rights which allows it to find other licensing partners beyond Netflix. The TV company has to wait a certain period of time before it can license the show elsewhere. But given Netflix’s foothold in the US and 180 countries, it becomes difficult to restream with another streaming service; the program loses its “original” status and instead functions as a rerun. Netflix wants the international rights and is often prepared to pay for the entire pro- duction budget to get them. As a result, a production company rarely gains addi- tional profit beyond Netflix. Even when the relicensing rights are available, the streamer often does not renew the series because it weighs the cost of licensing against its viewer numbers. Or in the words of Netflix, the company considers the following questions: “Are the rights to renew the licensing to stream still available?

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What is the popularity and cost of a particular title? Are there other seasonal or localized factors?” (Netflix Help Center 2018).

In 2017, Netflix leased the historic Sunset Bronson Studios!–!formerly the Warner Bros. studio and corporate home in 1940s, with 43 000 ft. of sound stages, offices, and support space!–!to produce US"based films and TV. It spent $12.4 billion for content in 2018 and was predicted to spend $15 billion in 2019. Even before the company started streaming, its Red Envelope division began to finance, license, and distribute documentaries (e.g. Born into the Brothel, 2004 Academy Award winner for Best Documentary). By contrast, Amazon can be defined more as a film streamer with four times as many movies as Netflix. It uses Amazon Studios in Los Angeles as the source for original productions and film distribution. It initially allowed anyone to submit a script via the internet!–!shades of the democratic logic of YouTube. It paid $10 000 for any script it developed and $200 000 for a script that became a movie. This policy resulted in 26 series and 23 film in development in 2013. By 2018, no more screenplays were to be submitted online. However, Amazon films produced the successful Manchester by the Sea (the first streaming film to win Academy Awards) and The Big Sick, one of the top streaming films released in theaters. Further, it distributed Asghar Farhadi’s The Salesman, an art house film, in theaters and made it available on Prime!–!exposing an Iranian film to a far wider audience than other Middle Eastern films through streaming. Thus, Amazon Prime is a film streamer as opposed to Netflix being a TV series maker.

Critics often cite Netflix as being responsible for revitalization of independent film and TV production in America in the 2010s. Or, as an IndieWire writer argues: “Netflix has become a!–!if not the!–!leading force in shaping the future of narrative visual storytelling” (Brueggemann 2017). Its strategy is to let original content drive growth. Because of its enormous global viewership, Netflix is interested in a sub- stantial diversity of niche programs and films. It allows for narrower content and a range of audience tastes and, as a result, independent film and series have flour- ished. The network spends more generously for its series than broadcast and cable TV. It paid $50–60 million a season for House of Cards and The New Black is Orange, which made the streamer a “must see” TV network. The Crown’s cost of $130 million per season seems huge, but the series helped launch Netflix’s penetration into British streaming markets. Some of its most critically acclaimed lower budget, but still well" funded, series are: Mindhunter (2017–), Dear White People (2017–), American Vandal (2017), Master of None (2015–2017), and The Unbreakable Kimmy Schmidt (2015) to name a few. Netflix’s qualitative difference has produced a large group of loyal users!–!a stable revenue base.

Many independent filmmakers are wary of Netflix’s lack of theatrical release, fearing that their work gets lost in the streamer’s huge catalog. Without the publicity and marketing surrounding a theatrical release, filmmakers do not gain the “name” necessary to attract more funding for other projects. Contrastingly, Amazon promotes its films with a publicity campaign for its theatrical releases. In 2018, it started shedding its quirkier independent series and films. It dropped two critically

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well"received unorthodox sitcoms made by women!–!One Mississippi (2015–2017) and I Love Dick (2016–2017)! –! for broader more conventional fare with a larger audience!–!evidence of the limits of independent TV series in this new world of streaming.

By 2018, Netflix had moved into producing more media by underrepresented groups based on race and gender!–!classic demographic categories. The Los Angeles Times reported: “Netflix will release more films directed by women in the next four months than the combined six major Hollywood studios have released in the entire year to date. (For the record, that number for the studios is four. If you exclude one title from specialty division Sony Classics, it’s just three.)” (Olsen 2018). Further, Netflix has signed major multiseries deals with black executive producers and direc- tors!–!Shonda Rhimes, Dave Chappelle, Ava DuVernay and Kenya Barris!–!stealing them from broadcast TV. Netflix started a “Strong Black Lead” initiative on social media and through live events in order to connect with black audiences regarding its effort to produce black series and film. It released an ad with 47 black creators, who have produced media for the streaming network. And Netflix even signed Michelle and Barack Obama to a multiyear producing deal which involves fiction series and documentaries! –! an extraordinary branding move. As opposed to its anti" demographic taste communities, “strong women lead” and “strong black lead” maintain race and gender as central categories for production, revealing the central role of identity politics in its streaming choices.

What fuels this desire for idiosyncratic and sectional programs is the nature of the internet. The often"used economic term “the long tail” (Anderson 2006) describes the line on the demand curve of media consumption that reveals the short head!–!traditional big media corporations and their blockbusters in television, film music, and books!–! is slowly dying out due to the boundless abundance of niche products in the digital age that will attract someone, somewhere, at some time. It began with the growth of cable TV and its proliferation of networks which catered to narrow interests!–!Lifetime for women, the Golf Channel for just one sport, Syfy for science fiction and Black Entertainment Television Network (BET) for just one race. But with the internet, a streaming company based on a subscription has the ability to continually expand its offerings to narrow audiences with specific tastes which have not been serviced by the traditional media producers who depend on large audiences to gain profits. And in the case of Netflix, it has created its own net- works by subdividing its offerings into various categories or genres that have taken over the need for niche cable networks.

A Netflix Original is content that is exclusively produced (sometimes co"pro- duced), distributed by, and shown on Netflix. By 2018, Netflix’s offerings divided into approximately two"thirds films and one"third TV series. An “original” series differs from a broadcast network program in that the producers receive the money for usu- ally two years of programs up front. The number of programs commissioned, the amount of money, and the guarantee of two years of episodes have been a catalyst for the growth of independent production. Although it still produces films, Netflix has

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made three times more TV series (1569 titles) than films, which have declined by 1000 titles. This interest in television programs speaks to the fact that Netflix prefers to engage audiences in the long"term commitment of multiple episodes that bind them to the streaming network. Nevertheless, Hulu lost $920 million in 2017, in part because it wanted to increase its original content by $2.5 billion to compete with Netflix and Amazon. It added seven new series for the 2017/2018 season, yet origi- nal scripted series are not its central focus, given that it added live TV to its offerings.

Production companies can develop more complex characters and narrative arcs with a promise of two years of episodes. Episodes and seasons can vary in length depending on the creator’s needs. One can argue that streaming series provide more of what Richard Dyer calls a “novelistic approach” to narrative and character devel- opment as opposed to the half"hour or sixty"minute formats of broadcast TV, which more often lead to formulaic stories and stereotypical characters aimed at a broad audience (Dyer 2002, p. 13). The series and films are different in that their form and content often break with what have been common TV and media traditions!–!white male protagonists who have clear goals that are achieved by the end of episode or film. Yet streaming series are still narrative"driven with a strongly defined lead. They move from popular culture to being more middlebrow! –! accessible art. Independent filmmakers are more interested in working with Netflix because of its money and support for small films and series at a time when the major studios are moving toward fewer and fewer films, preferring the big budget global spectacles such as the superhero films.

The “independent” relationship began with House of Cards in February 2013. What makes the series such a benchmark for streamed TV is that it is directed by David Fincher (a known film “auteur”) and starred actors normally associated with major films. It mixed a complex plot with two less"than"likeable lead characters, an ironic direct address by one of leads, and moody cinematography to underscore the cold reality of American politics. The New Yorker critic argued that the quality of the series meant the end of cable as the provider of quality TV: “House of Cards may not be the best show on television, but it is in the same league as the best shows, and that makes all the difference” (Wu 2013). The choice of the series announced Netflix’s dedication to quality and independent non"formulaic TV programming.

When its next critically acclaimed series, Orange is the New Black, a quirky wom- en’s prison drama that highlighted an economically, sexually, and racially diverse group of characters, came along later in 2013, the critical establishment again praised Netflix as the new studio of quality non"mainstream television. It focused on a mul- ticast of women characters, openly dealing with diverse sexualities, sexual violence, and the lower classes. Salon.com’s TV critic wrote of the social significance of the series: “There’s nothing like the power of storytelling to change the way we think and feel, though. Which means that for all its flaws, ‘Orange Is the New Black’ has the potential to join the pantheon of TV programs that have worked to move our coun- try forward” (Pozner 2013). The streamer has since continued to win a number of

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Primetime Emmys (112 nominations, which tops 108 nominations of HBO!–!the once touted mainstay of quality TV) and two Academy Awards for its documenta- ries (White Helmets 2017 and Icarus 2018)! –! the industry’s recognition for exceptionalism.

But there are limits to Netflix’s support of independent production. It has canceled the surreal Lady Dynamite (2016–2017); Sense8 (2015–2018)! –! a mystical sci"fi adventure from Lana and Lilly Wachowski and J. Michael Straczynski; Colleen Ballinger’s comedy, Haters Back Off! (2016–2017); Naomi Watts’s psychological thriller, Gypsy (2017); Baz Luhrmann’s The Get Down (2016–2017); Kay Cannon’s Girlboss (2017); and Chuck Lorre’s Disjointed (2017–2018), starring Kathy Bates!–!all series that highlighted either women producers or characters. What caused these series to be canceled will never be clear, given Netflix’s lack of transparency about viewer numbers.

The Ontological Crisis for!the!Media Industry

Netflix’s offerings have caused an ontological crisis in the industry about the differ- ence between film and television. It has upset the traditional industrial boundaries. Netflix’s eight Academy Award nominations in 2018 caused a number of industry people to question what exactly a movie is in the age of streaming. To qualify for the Oscars, Netflix releases most of its films theatrically in the US (usually for one week) which is the standard minimum to qualify as a “film.” But this dilemma was further underscored by the anger at 2017 Cannes Film Festival with the entry of two Netflix’s films!–!Okja (2017) and The Meyerowitz Stories (2017) into the competition. The outcry about the limited theatrical release of these film caused the festival to define all future entries as films that have had a theatrical release in France. More impor- tantly, the festival ruled that a film entry could not be streamed until three years after Cannes. As a result, Netflix pulled out of the festival in 2018.

Netflix has caused this problem in part because of its aggressive insistence on “day"and"date” releases, whereby a film premiers in theaters and online on the same date and time. Amazon Studios differs, releasing its five to ten films in theaters for longer runs in distribution partnerships with Roadside Attractions and Lionsgate and moving recently to self"distribution in the US. Its films are internationally dis- tributed as widely as possible in conjunction with local distributors, while, with a free market business logic, Netflix does not want any constraint. Ted Sarandos, the chief content officer for Netflix, responded to the Cannes festival situation with a self"congratulatory statement: “It’s just that the festival has chosen to celebrate dis- tribution rather than the art of cinema. We are 100% about the art of cinema” (Setoodeh 2018). Cannes’ refusal turned into a seismic shift in the festival world in Europe when the Venice Film Festival accepted six Netflix films that same year!–!some of which were made by well"known directors such as Alfonso Cuaron, the Coen Brothers and Paul Greengrass!–!and it became the festival to watch. In an

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age of convergence, Netflix has effectively narrowed the distinctions between old and new media, where the differences have stopped mattering for many makers and viewers.

Central to Netflix’s success is its willingness to take on huge debt – $8.5 billion to be exact!–!to make its rapidly increasing numbers of productions. Amazon Video has Amazon.com’s $150 billion backing. Hulu now has Disney behind it (and for- merly its major media owners offered financial support). Netflix debt is fueled by its desire to increase its global presence through increasing subscribers lured by a robust output of local productions. Its market value hit a high of $162 billion in May 2018, temporarily topping Disney’s net worth of $150.6 billion. It pledged to spend $13 billion to produce more content. In 2018 Netflix released 69 films, whereas Warner Brothers had 15 and Disney 23.

The streaming network has yet to turn a profit. Its debt is not considered a prob- lem by the company as long it continues to expand its subscribers (with 3.2 billion internet users worldwide) and is able to secure cheap loans. The spending topped every other studio’s outlay for non"sports related content. Debt is not unusual for a Hollywood media company; for example, Disney’s debt was $13.7 billion after its takeover of 20th Century Fox. As Reed Hastings, the head of Netflix, maintains: the company will continue to take on debt “for many years” (Huddleston 2017).

Globalization

Another important characteristic is Netflix’s global presence and the backlash against its usurpation of national and local production and distribution in other countries. Netflix’s avowed aim is to produce locally and distribute content globally. It first moved into Canada in 2010, whereas Amazon launched Amazon Video inter- nationally in late 2016 with availability in 200 countries. Its global offerings are lim- ited because Amazon does not have the rights to show a percentage of Amazon Video’s sizeable film collection outside the US.

By contrast Netflix has invested more than $1.75 billion in 90 original European productions, including licensed programming, original content, and co"produc- tions by 2017. It has been progressively letting the global reach of its business drive growth. There are more viewers outside America (even without China, where American streaming companies are not allowed to operate.) It has made series in 21 countries with such examples as Dark (Germany 2017–), The Crown (UK 2016–) and 3% (Brazil 2016–). One of its chief plans is to respect the cultural nuances of the local markets. The company dubs and subtitles to bring out the nuance of the original meaning in 13 or more languages. In 2018, it opened its first foreign production hub in Madrid to target Spanish language production of drama series. The 13 000 cast, crew, and extras working on 20 Netflix original productions in Madrid exemplifies Netflix’s mantra: “produce locally and glob- ally distribute content.”

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Additionally, it has co"produced with the leading public television networks, BBC and BBC2 (Britain), CBC (Canada), Canal+(France) and NRK1 (Norway)!– former state bastions of protectionism against the incursion of American media. The co"production agreements mean that Netflix gets the right to release the series to “the rest of world” in exchange for partial funding. Foreign producers are ques- tioning whether this is a good deal, given they usually contribute three"fourths of the costs. Netflix’s global co"productions have caused TV companies in other coun- tries to think increasingly about the worldwide reach of streaming and their own need to co"produce with other European TV companies to rival the standards set by Netflix’s expensive productions due to its deep pockets, something independent film producers have done for decades.

But the European experience of Netflix can be read at least two ways. Some European industry people see Netflix’s spending as rescuing dying TV industries. For example, it co"financed a $28 million Medici: Masters of Florence in 2016 and the series gave the sagging state TV network RAI 25% of the audience!–!a substantial boost. According to Variety, the head at Lux Vide studio in Rome “hopes ’Medici’ will be the trailblazer for a new TV genre hailing from Italy that he calls ’Mediterranean drama,’” and, “Mining this rich material with bigger budgets, the right skill sets and a global outlook can become ’the starting point for something completely new in high"end TV’” (Vivarelli 2018).

Nevertheless, other European broadcasters fear the loss of their audience due to the ease, technological prowess, and relative high budgets on the Netflix’s platform. For example, Netflix’s The Crown cost $130 million for a 10"episode season, whereas Britain’s ITV Network spent $150 000 per episode for Downton Abbey (2010–2015). European TV networks have joined forces to create national streaming platforms. In France, the three most popular TV networks! –! France TV, M6, and TF1! –! have joined together to create Salto, a streaming service for its combined programs. In Germany, commercial TV ProSiebenSat.1 created Maxdome as its online streaming service by merging with Discovery Communication’s Eurosport for a VOD service. The two have invited other major German commercial and public TV networks to join the service. And in Britain the three leading broadcast networks!–!BBC, ITV, and Channel 4!–!have signed a five"year agreement to invest over $150 million in the existing VOD, the digital terrestrial platform Freeview, to provide live and on" demand TV.

At one time, such mergers were prohibited by law as a form of collusion and ille- gal due to antitrust legislation. But these broadcast networks argue that such agree- ments are necessary in the face of Netflix’s and Amazon’s dominance of the European streaming market. Earlier European attempts at streaming services were severely undercut when Netflix extended into Europe. For example, the French Canal Plus’s number of streaming subscribers fell from a high of 800 000 in 2014 to 200 000 in 2018 with the arrival of Netflix (Roxborough 2018).

Some Asian streaming services surpass Netflix and Amazon Prime’s presence in their respective countries. In India, Hot Star TV, a streaming and video on"demand

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service launched by Star India, is more popular than the two leading US streamers. However, Star India is a subsidiary of 21st Century Fox, which was acquired by Disney!–!an example of global consolidation and continued American dominance. By 2017, Thailand (V Line), Korea (pooq and Rakuten Viki), Taiwan (iQiyi!–!the vast mainland China network), and Japan (Showroom) all outranked Netflix and Amazon as popular streaming services. Netflix only started to penetrate the Asia market in 2016.

The high subscription rates for the American streaming services (reduced to $7–8 per month for Asia) is a barrier for countries where people earn half that much for a day’s work. (The equivalent rate would be $100–200 a month for Americans.) Amazon, Netflix, and Hulu subscription rates only work where there is a solid mid- dle class with disposable income. Netflix has signed agreements to produce localized content in South Korea! –! one of Asia’s wealthiest countries. By contrast, poorer Asian countries lack reliable broadband. The English language basis of Netflix’s offerings causes lack of interest. Many people in Asia still prefer programs and films about their culture in their own language.

In 2018, Netflix made its streaming service available to 54 countries in Africa. It hired a director of content acquisition in Amsterdam for the Middle East, Turkey, and Africa with the object of sourcing local content and acquiring the rights to local films and series. The grouping of so many different countries is a problematic logic for localizing content. It must also negotiate the potentially explosive political con- tent of local films and programs of which Netflix, as a Western company, might not be aware. (Consider the angry reaction to the depiction of Colombia in Narcos [2015–2017] by its citizens [AFP].) Netflix has already picked up films like the Nigerian box"office hit The Wedding Party (2016) and Catching Feelings (2018), a South African romantic comedy. But it has yet to develop a significant producing presence in Africa.

The main African competition is iROKO TV, often called the “Netflix of Africa.” Its success is built on its large catalog of Nigerian films, which are more popular in Africa than Hollywood films. It got the distribution rights early on in Africa to iTunes and Amazon retail. The company’s future ability to mature is based on the growing young consumer class in Africa. The problems still are the poor internet connection, the lack of internet penetration, and expensive internet access, with broadband prices amounting to 10 times what they are in Asia in terms of percent- age of daily income. As a result, 55 % of iROKO’s and Netflix’s African subscribers come from the substantial diasporic community outside of Africa (Mohammed 2016). Nevertheless, the number of smartphones is growing in Africa and with this comes the growth of mobile TV.

Netflix’s global power has led critics to question whether it is the newest embodi- ment of Western media imperialism. The combination of the Cannes Film Festival’s controversy about Netflix and the definition of film, and the difficulty of creating viable counternational streaming networks, has led to calls of imperialism or, as one French official, Christophe Tardieu, director of the National Cinema Center, has

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described Netflix: “the perfect representation of American cultural imperialism” (Munzenrieder 2017). Others fear that the streaming service and its global hold represent the rise of a new monoculture where local culture and stories will not be able to compete. Even with Netflix’s co"production agreements with non"American producers, a Netflix film or Netflix series will evolve in terms of style and content due to the practices of the corporation, such as its 2000 global taste communities that help define what gets produced. Consider how Apple, Ikea, Amazon, and now Netflix have come to define the global cultural experience!–!a serious narrowing of cultural products and experiences.

Conclusion: Where Linear TV, Cable, and!Streaming Crash!into!Each Other

The last manifestation of streaming is the return to live television. It is recreating cable as “virtual cable,” where a company streams content in real time allowing a number of broadcast channels to be mixed with subscription streaming services. In the industry, they are known as MVPDs (multichannel video programming distrib- utors). By 2018, Hulu, Sling, Fubo DirecTV Now, Roku, Apple TV and YouTube all offered live multichannel TV. They are often referred to “skinny bundles” in that they do not offer as many channels as traditional cable companies and as a result they are less expensive. They are part of a general transformation of the industry as viewers become ever more frustrated with the limits of cable and “cut the cord” as they move from cable to the internet.

Live streaming was first added to Twitter in 2014. A demonstration had broken out in Taksim Square, Istanbul and one of the individuals who went on to develop the software was frustrated because he wanted to see, and not just read about, the political event. And thus, Periscope was invented!–!Twitter users started adding live feeds from their mobile devices to their written comments with the ability to play back the stream. Soon Meerkat, another live streaming service, allowed users to con- nect their Facebook and Twitter (which quickly cut off its connection to Periscope) accounts with live feeds for their followers. Here you have the democratization or “YouTube"ing” of live TV: anyone with a phone and a Twitter account could broad- cast a live moment or event such as a demonstration, an interaction with authorities, or a natural disaster as it played out instead of allowing TV news corporations to control its depiction.

The professional streaming of live TV does not involve long and expensive contracts that bundle often a hundred unwanted channels together with the most sought"after. YouTube Live TV is a multichannel live streaming service that costs three time more than Netflix per month. It features the programs of the five networks (ABC, NBC, CBS, Fox, and CW) with 40 streaming channels. Twitch is the live streaming of video"game playing and an important subdivision of Amazon with its 100 million viewers and $970 million in revenues. Google via YouTube came to live TV relatively late, entering an

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established field of Direct TV Now, Hulu with Live TV, PlayStation Vue, and Sling TV. Hulu with Live TV has firmly stated that its focus is still on “on"demand commercial free viewing rather than live, ad"supported programming.” Yet for all these live stream- ers, the difficulty of navigating the proliferating number of separate streaming compa- nies with proprietary content remains a barrier to replicating cable.

More importantly, Comcast declared that it had completed an arrangement to add Amazon Prime Video, Netflix, and YouTube to the online content available through its set top Xfinity X1 service. Once corporate foes, the three major stream- ing networks may be reviving cable, and the cable company may help increase the penetration of the streaming networks into the American market. This agreement suggests that even guarded companies such as Netflix, with a robust proprietary interest in their original content, are willing to become part of cable. Perhaps the television industry is not changing so dramatically. Instead of cord" cutting, we have cord shifting where linear pay TV delivered via a box is exchanged for linear pay TV delivered via the internet!–!a shift in technology, not companies. In the end, Netflix stands as a prolific, transnational media producer and distributor. Due to its ability to cater to smaller and more diverse audiences on the internet, it has changed televi- sion and film by making TV more complex and global.

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A Companion to Television

SECOND EDITION

Edited by Janet Wasko and Eileen R. Meehan