Netflix’s senior executives downplayed the impact of recently cancelled original series, telling investors on one hand that it needs to keep taking programming risks — while also pointing out that its renewal rate is far higher than traditional TV networks.
“If you’re not failing, maybe you’re not trying hard enough,” chief content officer Ted Sarandos said on the company’s interview discussing second-quarter 2017 results.
Compared with the rest of the TV biz, Sarandos said, cancellations have been “novel” only for Netflix — saying that 93% of the streamer’s original series have been renewed. TV networks cancel one-third of their shows in the first season on the air, he said.
“When you have a very high hit ratio, you definitely want to keep second-guessing yourself even though you do [have a high renewal rate],” Sarandos said. He added, “The more shows we have, the more likely in absolute numbers that you’ll see cancellations, of course.”
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CFO David Wells said Netflix looks at viewing trends quarterly to determine which originals to keep investing in, and “it really is, for us, about the continuity of viewing over the life of the show.”
“Overall, you’ll see us try to wrap the narratives” on shows that are not renewed, Wells said, citing the drama “Bloodline” (which ran for three seasons on Netflix) as an example.
Netflix recently announced that it would not bring back two high-profile shows, Baz Luhrmann’s “The Get Down” and the Wachowski siblings’ “Sense8,” both of which were said to have very high production budgets. Last month it canceled “Girlboss” after one season, and in late 2016 concluded the run of Weinstein Co.-produced “Marco Polo” after two seasons.
Meanwhile, in an unusual move, Netflix fielded questions for the investor interview Monday from only one analyst: UBS’s Doug Mitchelson. The single-interviewer format was “for a little bit more continuity,” according to Wells. Even though the interview appeared to be pre-recorded, the 38-minute session suffered technical glitches as the audio from Mitchelson was fairly garbled throughout.
Also in the interview, Netflix CEO Reed Hastings again cited YouTube as a benchmark for viewing activity, saying Netflix still has a ways to go before it catches up to Google’s video service.
“I’m not sure we are leading [streaming video], when you look how far ahead YouTube is,” Hastings said. “Now you might say, well, it’s different content but it’s still very engaging for the audience that is choosing it.”
For the second quarter, Netflix added 5.2 million subscribers — a company record for Q2 — which blew past Wall Street expectations and drove the stock up more than 10% in after-hours trading.
Last week, Netflix picked up 91 nominations in the 2017 Emmy Awards, up from 54 last year. The streamer has five contenders in best-series categories in this year’s Emmys race: “Stranger Things,” “The Crown,” “House of Cards,” “Master of None” and “Unbreakable Kimmy Schmidt.”
Pictured above: Netflix’s “Sense8” two-hour special, which will conclude the series from the Lana and Lilly Wachowski.