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FX’s John Landgraf Sounds Alarm About Potential Netflix ‘Monopoly,’ Overall Series Growth

FX Networks chief John Landgraf came to the Television Critics Association press tour on Tuesday armed with statistics about peak TV as he sounded the alarm about the potential for Netflix to exert “monopoly” power over the creative community.

FX Networks research projects that the volume of original scripted series (not including children’s programming) will reach more than 500 by next year. By FX’s count, Netflix alone has 71 series on deck, not counting kidvid and foreign-language productions.

Landgraf likened Netflix’s meteoric rise as a purveyor of programming to the trend in Silicon Valley in single companies dominating sectors, citing the overwhelming market share for Google in search, Facebook in social media or PayPal in financial transactions.

Landgraf apologized for “getting philosophical” in the discussion. But there was no question that the veteran exec is troubled by what he sees as a shift to viewing programming as a commodity.

“It’s a point of real emotional meaning to me — storytelling and storytellers have a unique place in our society and in human culture. We are the only animal that tells stories,” he said.

Regarding the tendency for over-lord companies in the tech sector he added: “I just think that’s something that we as a society should be paying attention to in general. I think it would be bad for storytellers in general if one company was able to seize a 40-50-60% share in storytelling. I don’t think monopoly market shares are good for society, and I think they’d be particularly bad for society and storytellers if they were achieved in the storytelling genre.”

Beyond the Netflix and Peak TV discussion, Landgraf devoted a significant portion of his exec session to discussing the cabler’s effort to improve level of diversity among the directors of its series. He gave a big shout-out to Variety Chief TV Critic Maureen Ryan for a story last November citing the shockingly low level of women and minorities behind the camera at FX and other top networks.

“I want to thank Mo Ryan for giving us — and the rest of our industry — a good, swift well-deserved kick in the butt,” He said.

Landgraf allowed that Netflix and its largest SVOD competitors, Hulu and Amazon, are turning out some quality shows: “I have respect for anyone who helps a creator put a great television show on the air.” He cited Netflix’s Aziz Ansari comedy “Master of None” as a show he admires.

But at the same time he clearly questioned the impact of Netflix’s enormous volume growth and what many see as a reliance on data and algorithims to make programming decisions.

“Television shows are not like cars or operating systems, and they are not best made by engineers or coders in the same assembly line manner as consumer products which need to be of uniform size, shape and quality,” Landgraf said.

Landgraf predicted last year that the number of original scripted series on television and streaming would peak in 2015 or 2016. On Tuesday he said he was wrong.

“It now seems clear that, at a minimum, the peak will be in calendar 2017 — and there is enough inertial momentum here that we could well see the growth trend carrying over into the 2018 calendar year,” Landgraf said. But he is still expecting peak TV to peak.

“I will still stick by my prediction that we are going to hit a peak in the scripted series business within the next two and a half years — and then see a decline — by calendar (2019) at the latest,” he said.

The reason for that eventual decline, according to Landgraf, stems from the rising cost of making television and the increasing difficulty of monetizing it. He estimated that the average cost of producing and marketing an hour of television is now between $4 million and $5 million, up 20% from five years ago. “Therefore you have to have really robust monetization for it to be profitable,” he said.

That profitability requires millions of viewers, he added. But, citing more FX internal research, he estimated that while the top 20% of scripted shows on television average 10.5 million viewers, the bottom 20% average only 380,000.

 

That volume of television, Landgraf said, is making it too difficult for audiences to differentiate great TV, good TV and bad TV.

“While there is more great television than at any time in history, audiences are having more trouble than ever distinguishing the great from the merely competent,” he said. “I do this for a living, I have a pretty good memory, and I certainly can’t come close to keeping track of it all.”

Moreover, Landgraf questioned how Netflix’s programming team can handle so many shows. He cited the hands-on approach of his core programming and marketing team as a selling point to creatives, at a time when the paydays for top talent are growing by leaps and bounds.

“The way we make shows is highly focused, highly human-scaled — not industrial,” he said. “It’s an extremely personal way of making television.”

With two networks to program in FX and FXX, the team is “at or near our capacity of what we can really pay attention to.” FX fielded 14 original series last year and will hit 17 or 18 this year. He said 21 or 22 was probably the most they could ever do.

“You could give me all the money in the world and I could not make an organization that could supervise 71 shows with anywhere near the personal attention” that the team provides now, he said.

Landgraf insisted that he does not anticipate that the current content bubble will pop, causing a sudden, radical reduction in the number of scripted series, but will rather see slow but steady decline.

“Rather, I think we are ballooning into a condition of oversupply which will at some point slowly deflate, perhaps from 500-plus shows to 400 or a little less than that,” he said. Netflix cannot possibly keep up its torrid pace of doubling the size of its roster each year, otherwise “the entire planet surface would be covered by Netflix’s television shows,” he said.

All that said, Landgraf was forced to acknowledge Netflix’s importance as a buyer that allows FX to realize profits from its high-end productions. The deal that 20th Century Fox TV and FX Productions recently set with Netflix for SVOD rights to “People V. O.J. Simpson” was “phenomenal from a financial standpoint” for the studios and profit participants including exec producers Ryan Murphy, Nina Jacobson and Brad Simpson.

Among other topics Landgraf touched on:

  • Landgraf enthused that FX had the best first half of a year in its history, thanks to “The People V. O.J. Simpson: American Crime Story,” “The Americans” and “Fargo.” He noted that FX set a new basic cable record for Emmy nominations — with 56 — from 14 program submissions, compared to 39 apiece for HBO and Netflix.
  • FXX, which will mark its third on-air birthday next month, will be moving “really aggressively” into more animated series and short-form animated series. He cited Adult Swim’s “Rick and Morty” as a “really good show” that demonstrates the creative potential of the adult-oriented toon format.
  • Landgraf cited upcoming comedies “Better Things,” from “Louie” alum Pamela Adlon, and “Atlanta,” from comedian Donald Glover, as examples of where he sees the future of TV comedy — deeply personal slices of life from distinctive personalities. “One of the things I’m really excited about is how rich and cinematic (and) how emotional and deep as well as funny comedies can be these days,” he said.

 

 

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