Netflix produced some of the most talked about new shows of 2016, from The Crown—its most expensive production to date—to Stranger Things to Marvel’s Luke Cage.
For Netflix, which aims to release something each individual subscriber will enjoy every single month, a diverse library of high-quality originals like these is crucial to growing and retaining its subscriber base. But it’s unclear exactly how hot new programming translates into subscriber growth—one of Wall Street’s measures of success for the streaming giant. Often, it doesn’t happen immediately.
The platform says it doesn’t see a boost in subscribers tied to a particular show until the second season, after it has built up buzz and possibly earned some award nods. “It tends to be follow-on seasons of originals because it’s known intellectual property at that time,” said Spencer Wang, vice president of finance and investor relations at Netflix, speaking at an RBC Capital Markets conference last month.
To be sure, a few shows have driven subscriber growth for Netflix during their freshman runs, like Stranger Things and Marvel’s Luke Cage. But those seem to be rare.
When a show does manage to draw in new members, Wang cautioned that it usually adds hundreds of thousands, not millions. That makes completely original series even more risky for the platform, because it’s often shouldering exorbitant marketing and production costs without knowing when and if they will pay off.
“While we do put a big marketing push behind new [intellectual property] like The Crown, it is new IP, so it does take some time to find an audience and does not usually drive a material amount of acquisition,” Wang said.
This is a departure from free-to-air TV, where shows have historically lived and died on Nielsen’s measure of viewership. Shows with low ratings were swiftly cut down—sometimes as early as three weeks into a season. Netflix, by comparison, rarely cancels shows. One of its highest profile cancellations was of the Emmy-nominated thriller Bloodline; the verdict came after the third season.
To hedge against newer bets, Netflix has given second lives to older programs like Arrested Development, Gilmore Girls, and Full House that were cancelled by their respective broadcast networks years earlier. These revivals had dedicated fan bases that Netflix could tap into—offering a quick payoff from nostalgic fans who were eager for a reprisal.
Fans and critics found plenty of flaws with the Gilmore Girls revival, but at least 5 million people, or 6% of Netflix’s subscribers, still streamed Gilmore Girls: A Year in the Life in its entirety within three days of its release, third-party measurement firm Symphony Advanced Media estimated. (Netflix itself doesn’t release viewership numbers and reject third-party data.) It was reportedly Netflix’s third most-binged series of the year in that window, behind another revival, Fuller House, and season five of Orange is the New Black.
In contrast, season two becomes even riskier with a revival because it has to faithfully build on the original to keep fans around.
Fuller House is the only of the three to get a second season, which will be released on Friday. Arrested Development was expected to get a fifth season and a movie, but three years later, production hasn’t started on either. And Gilmore Girls was planned as a four-episode mini-series, although chief content officer Ted Sarandos said he’s open to a sophomore season.