Picking Shovels

Netflix has a retention problem. You watch the first season of a show, but you don’t come back for subsequent seasons. There are probably a few reasons why this is the case, and one of them could be the business model. “Netflix pays upfront production costs for both originals and outside productions, owns the international distribution, and offers a massive pay bump if the show makes it to season three. This makes sense if your business model is based on gaining new subscriptions. You’re not buying long-running audience-sustaining properties to reliably run ads against. You’re buying newness. So there’s very little incentive in, say, building a solid audience for your live action Avatar: The Last Airbender adaptation, but there’s a huge incentive in announcing you have one.” Ryan Broderick in Garbage Day with a good overview of the second season problem, and how it mirrors other issues in the digital content business. Netflix and the value of streaming shovelware.