A blockbuster bout in event TV is about to go down this weekend. On Friday, Netflix’s global hit “Stranger Things” returns for its fourth season after a nearly three-year hiatus, while Disney+ is unveiling the long-awaited “Obi-Wan Kenobi” series, featuring Ewan McGregor’s grand return to the “Star Wars” franchise.
It’s a showdown reminiscent of a bygone television age: two shows from rival networks, both with mass appeal, competing for viewers’ time and eyeballs. But unlike in those days of yore, determining a winner won’t be as simple as seeing which show draws more viewers — in fact, it might not be possible at all.
Yes, the shows’ ratings will be measured, in a sense. “Stranger Things 4” will almost certainly lead Netflix’s weekly top-10 chart for at least the week of its debut, and it could very well surpass “Bridgerton” as the streamer’s most watched English-language series ever, at least going by the patented Netflix unit of “hours viewed in its first 28 days” of availability.
Meanwhile, TV-ratings institution Nielsen will chart the performances of both “Obi-Wan” and “Stranger Things” in millions of minutes streamed per week. (Disney+ does not independently disclose viewership numbers.)
Of course, viewing time is hardly the most important metric to measure these series’ success. Far more significant is the number of new subscribers “Obi-Wan” and “Stranger Things” can reel in for their respective services. After Netflix’s disastrous Q1 correction and all that came after, executives are undoubtedly hoping “Stranger Things” can help the company outperform its ominous Q2 forecast, which predicted a loss of 2 million more subscribers.
Disney, meanwhile, is striving to avoid a similar fate by continuing Disney+’s rapid upward trajectory and thereby prove it really can get to 250 million subscribers by 2024. When the companies announce their next quarterly results, expect “Obi-Wan” and “Stranger Things” to be name-checked more than once, particularly if the results are good.
But even subscriber numbers won’t be enough to declare a winner in this epic battle. “Obi-Wan” and “Stranger Things” are arriving at a transformative and perilous time for the streaming industry, as the market’s growing skepticism of its business model is fueling a brutal correction for media stocks.
Those two series are apt symbols for the billions of dollars being poured into direct-to-consumer content (“Stranger Things” season 4 cost $30 million per episode, the Wall Street Journal reported in April), costs investors are viewing with ever-increasing scrutiny as they demand proof that streaming services can be profitable.
Indeed, Disney stock fell after its most recent earnings call, despite the better-than-expected addition of 8 million Disney+ subscribers — a sure sign that the market is not rewarding this growth the way it used to.
In short, the terms of success in streaming are changing dramatically, and as a result judging a series’ true value to a platform is becoming knottier than ever. Like movies, original streaming shows have to deliver big numbers quickly or risk being written off as a failure (especially on Netflix). They have to help draw subscribers, but increasingly they also have to help convince existing subscribers to stick around and not simply churn out once they’ve finished watching a given show.
As such, any one series is less important than the service’s library, but the library must keep growing to keep the subscriber base growing, the conventional wisdom goes. To do that, lots of money needs to be spent on content, but now investors are growing leery of that spending.
As the streaming business evolves, then, series will have to start justifying their expenses by visibly contributing to their services’ profitability. To do that, answers will need to be given to a lot of long-unanswered questions: How much of the show’s viewing time came from new subscribers? How many of those subscribers previously canceled and then resubscribed? How have old episodes of the show performed among new customers over time — which is to say, how much drawing power does the show really have? How often do existing subscribers rewatch a show? And what is the return on investment in terms of money spent on a series versus the financial value it generates for the service?
Take the case of “Obi-Wan Kenobi.” There’s reason to believe its debut will provide a big boost in Disney+ subscribers, as the streamer’s second-biggest quarter of growth came at the end of 2020, coinciding with the release of “The Mandalorian” season 2. (Its all-time biggest was the second quarter of 2020, when the great COVID lockdown spurred massive streaming sign-ups across the board.)
Not for nothing, “The Mandalorian” is also the most streamed show on Disney+, with nearly 16 billion minutes of viewing time, according to available Nielsen data — more than double that of second-place finisher “Loki.”
But this data begs the question of how many “Star Wars” fans are left for Disney to scoop up. Are there really a significant number of franchise devotees who haven’t signed up for Disney+ already? It’s possible that viewers who have churned out will return for “Obi-Wan,” but that lift will be temporary. How much revenue is the show really going to generate for the streamer, particularly with what must have been a blockbuster-sized budget?
It may be delusional to think that any company would provide all this information, when giving a more limited picture has served streamers so well for so long. But both Netflix and Disney+ are going to find themselves accountable to advertisers in the near future, which will likely require a lot more disclosure. And the piecemeal information streamers provide is going to start hurting them soon, if it hasn’t already. If this business is going to prove itself sustainable, the market will need a much better picture of how it actually works.