Production Companies Can Influence TV Networks

But it will take the right digital strategy

Good news! Fox’s kicky comedy New Girl is now on Netflix and Hulu. Bad news! If you want to catch up, it’s time to get cable.

Good news! Fox’s kicky comedy New Girl is now on Netflix and Hulu. Bad news! If you want to catch up, it’s time to get cable.

Like many of its peers, Fox has adopted the “trailing five” model for its big shows on Hulu, notably the Zooey Deschanel vehicle (past seasons of which recently debuted on Netflix). Briefly, that means that if you want to catch up on New Girl from the beginning, you need to subscribe to a cable/satellite/telco TV service in order to watch every episode—otherwise, you can only access the most recent five episodes on a nonauthenticated service (eight for The Simpsons). 

Neither the networks nor producers wanted to talk on the record about this, but the ideal setup is mostly gleaned from historical data. “The Turner networks, a few months ago, acknowledged that making kids’ content available to Netflix maybe hurt their ratings,” said Brian Wieser, senior research analyst with Pivotal. Yet serialized dramas frequently gain viewership with a large digital presence—Breaking Bad, for example, got a major helping hand from Netflix.

But production companies and the networks aren’t always going to agree on terms for digital rights. Serial sci-fi drama Almost Human, for example, is produced by Warner Bros. Television, though it’s broadcast on Fox—WBTV only makes five episodes available at a time. Revolution—another Warner Bros. show—trails five as well. It’s hard to imagine these shows wouldn’t benefit from a greater digital presence, but the value proposition for Hulu is strong, too. Disney chairman, CEO Bob Iger put it bluntly: “If distributors are going to be given the ability to offer their customers essentially same season—full-season stacking—then there is a cost associated with this, and we expect to get paid for it,” he said during the company’s earnings call earlier this month.

There is a price for all these rights—it just may be very high. “They’re going to manage a library as a collection of assets to be optimized,” said Wieser.

Advertisers aren’t exactly crying over damage to the Hulu/Netflix combo model, which has been touted as a replacement for expensive cable packages.

“If it’s a successful model—if Netflix and Hulu are starting to steal audience share from television or even an online video screen—there’s less supply and the same demand and the CPM goes way up,” said one ad buyer. Yes, up—since ads are sold by GRPs, lower ratings mean scarcity. Advertisers dig Hulu, but there’s no substitute for Nielsen-measured ratings.

So expect to see fewer shows with both a back-catalog on Netflix and a complete current season on Hulu. The model is all well and good while it allows networks to add a third revenue stream on top of cable sub fees and ad revenues. But the minute it starts eating into one of those less tenuous sources of money, it’ll go away.