7 ms·

The write off is based on the cost of creating the show. I think the article is wrong/sloppily phrased in its line about the value of the company. If they remov

The write off is based on the cost of creating the show. I think the article is wrong/sloppily phrased in its line about the value of the company. If they remove a show then it will never generate any future revenue so they can write the cost of producing it off as a loss. The real scandal here is how little viewership streaming shows get and how little revenue they generate off of that viewership. Particularly for how expensive these shows are. I wrote a couple of comments elsewhere in the thread about some specifics and consequences. But the takeaway is that the last decade+ of super expensive “prestige” shows on streaming has been a huge bubble that isn’t supported by the underlying revenue generated by the shows. In 2022 Netflix spent $16 billion on producing shows [https://variety.com/2023/digital/news/netflix-content-spending-cash-in-2022-1235496740/ https://variety.com/2023/digital/news/netflix-content-spendi...] to generate shockingly few viewing hours (which is why they will never agree to WGA demands to release viewership numbers in order to pay writers residuals; their stock would go to 0 if those numbers ever became public). The future of streaming is ad-supported cheaply produced reality TV, ie exactly what niche cable looked like in 2008.

WeylandYutani 3y ago
The problem with prestige TV is that most people just want to watch garbage. The path to profitability is reruns of Cheers, low budget quiz shows and (scripted) reality TV.
- phpisthebest 3y ago
  That is not true... I would love to see a show made on the Calibre of Cheers... however those shows do not fix modern narrative thus can not be made. People want to watch good scripted shows, instead of they get terrible writing, terrible acting, and over all terrible shows....
RcouF1uZ4gsC 3y ago
> (which is why they will never agree to WGA demands to release viewership numbers in order to pay writers residuals; their stock would go to 0 if those numbers ever became public) I wonder what percentage of streaming hours on Netflix is toddler and preschool shows like CoComelon?
pimlottc 3y ago
> The write off is based on the cost of creating the show. I think the article is wrong/sloppily phrased in its line about the value of the company. If they remove a show then it will never generate any future revenue so they can write the cost of producing it off as a loss. Yeah, I was going off the article's statement that it was about reducing value of assets. Makes more sense if write-offs are included as well.
rjtavares 3y ago
Ad-supported cheaply produced reality TV + added subscription for premium content. Basic cable + HBO.
pjc50 3y ago
> why they will never agree to WGA demands to release viewership numbers in order to pay writers residuals; their stock would go to 0 if those numbers ever became public Well, they're not going to have any WGA shows either any time soon, and maybe the WGA will start advocating for an investor lawsuit on this basis?
- hindsightbias 3y ago
  I think the Matrix Architect would represent Netflix best here: "There are levels of survival we are prepared to accept."
TheJoeMan 3y ago
Why is it the bean counters need to perfectly pair the cost of show A with views of show A? And then cheaper B to B? There’s a synergy in having the whole platform. Your advice would be telling Apple to ditch the $10 headphone dongle because it has a low ROI, and they should be using the factory to crank out more iphones…
- Jeff_Brown 3y ago
  That's not the exercise. The exercise is "make it if and only if it will generate more revenue than it costs[1]". That doesn't have to be because people watch it. A prestige show (Succession, say) can bring people to a platform where they end up watching something less demanding (Friends, say). Even if nobody watches the prestige show, therefore, it can still be worth it. That makes it hard to know what is profitable. [1] where "cost" includes "opportunity cost"
pimlottc 3y ago
Is there any sort of time limit for writing off the production costs? I guess it makes some sense when you scrap a project completely and take a loss in exchange for a write-off, but some of these shows have been available for years.
phpisthebest 3y ago
The desire and market is there for Good TV Shows... I am still waiting for one of the Streaming Services to Make a Good TV Shows... Until then I have TB's of good content from the past on my Home Media Server, I have no problems re-watching...
deleted 3y ago
[deleted]
AJ007 3y ago
I really have wondered who convinced them the strikes were a good idea. It's clear the streaming content bubble has popped. It was a revenue windfall for everyone involved save investors (Disney's stock has lost nearly a decade of gains.) The AI stuff is a wildcard on top of everything. The worst case scenario for the WGA and SGA is that the more successful they are with their getting their demands, the less likely there will be anything resembling North America's film/tv industry left within 5 years.
- readthenotes1 3y ago
  Maybe the workers involved? Most background actors replaced by AI generated substitutes. Writer rooms turned into editor rooms for AI generated thoughts that simply rehash the existing 100k hours of plots already extant. In a sense, it's the buggy whip workers striking after the Advent of cars
tpmx 3y ago
In 2022 Netflix spent $16 billion on producing shows That's a large number but so was their revenue: $31.6B.
thrill 3y ago
"In 2022 Netflix spent $16 billion on producing shows [https://variety.com/2023/digital/news/netflix-content-spendi https://variety.com/2023/digital/news/netflix-content-spendi...] to generate shockingly few viewing hours (which is why they will never agree to WGA demands to release viewership numbers in order to pay writers residuals" So, Netflix declines to release viewing numbers but you somehow know they're insufficient to their bottom line to support their spend?

WeylandYutani 3y ago

The problem with prestige TV is that most people just want to watch garbage. The path to profitability is reruns of Cheers, low budget quiz shows and (scripted) reality TV.

phpisthebest 3y ago
That is not true... I would love to see a show made on the Calibre of Cheers... however those shows do not fix modern narrative thus can not be made. People want to watch good scripted shows, instead of they get terrible writing, terrible acting, and over all terrible shows....

RcouF1uZ4gsC 3y ago

> (which is why they will never agree to WGA demands to release viewership numbers in order to pay writers residuals; their stock would go to 0 if those numbers ever became public) I wonder what percentage of streaming hours on Netflix is toddler and preschool shows like CoComelon?

pimlottc 3y ago

> The write off is based on the cost of creating the show. I think the article is wrong/sloppily phrased in its line about the value of the company. If they remove a show then it will never generate any future revenue so they can write the cost of producing it off as a loss. Yeah, I was going off the article's statement that it was about reducing value of assets. Makes more sense if write-offs are included as well.

rjtavares 3y ago

Ad-supported cheaply produced reality TV + added subscription for premium content. Basic cable + HBO.

pjc50 3y ago

> why they will never agree to WGA demands to release viewership numbers in order to pay writers residuals; their stock would go to 0 if those numbers ever became public Well, they're not going to have any WGA shows either any time soon, and maybe the WGA will start advocating for an investor lawsuit on this basis?

hindsightbias 3y ago
I think the Matrix Architect would represent Netflix best here: "There are levels of survival we are prepared to accept."

TheJoeMan 3y ago

Why is it the bean counters need to perfectly pair the cost of show A with views of show A? And then cheaper B to B? There’s a synergy in having the whole platform. Your advice would be telling Apple to ditch the $10 headphone dongle because it has a low ROI, and they should be using the factory to crank out more iphones…

Jeff_Brown 3y ago
That's not the exercise. The exercise is "make it if and only if it will generate more revenue than it costs[1]". That doesn't have to be because people watch it. A prestige show (Succession, say) can bring people to a platform where they end up watching something less demanding (Friends, say). Even if nobody watches the prestige show, therefore, it can still be worth it. That makes it hard to know what is profitable. [1] where "cost" includes "opportunity cost"

pimlottc 3y ago

Is there any sort of time limit for writing off the production costs? I guess it makes some sense when you scrap a project completely and take a loss in exchange for a write-off, but some of these shows have been available for years.

phpisthebest 3y ago

The desire and market is there for Good TV Shows... I am still waiting for one of the Streaming Services to Make a Good TV Shows... Until then I have TB's of good content from the past on my Home Media Server, I have no problems re-watching...

deleted 3y ago

[deleted]

AJ007 3y ago

I really have wondered who convinced them the strikes were a good idea. It's clear the streaming content bubble has popped. It was a revenue windfall for everyone involved save investors (Disney's stock has lost nearly a decade of gains.) The AI stuff is a wildcard on top of everything. The worst case scenario for the WGA and SGA is that the more successful they are with their getting their demands, the less likely there will be anything resembling North America's film/tv industry left within 5 years.

readthenotes1 3y ago
Maybe the workers involved? Most background actors replaced by AI generated substitutes. Writer rooms turned into editor rooms for AI generated thoughts that simply rehash the existing 100k hours of plots already extant. In a sense, it's the buggy whip workers striking after the Advent of cars

tpmx 3y ago

In 2022 Netflix spent $16 billion on producing shows That's a large number but so was their revenue: $31.6B.

thrill 3y ago

"In 2022 Netflix spent $16 billion on producing shows [https://variety.com/2023/digital/news/netflix-content-spendi https://variety.com/2023/digital/news/netflix-content-spendi...] to generate shockingly few viewing hours (which is why they will never agree to WGA demands to release viewership numbers in order to pay writers residuals" So, Netflix declines to release viewing numbers but you somehow know they're insufficient to their bottom line to support their spend?