4 Reasons Why Those 'Netflix Won't Release Ratings' Stories Miss The Point

Like every other segment of society, the world of entertainment is filled with facts that "everyone knows." And more often than not, everyone is wrong. It's not that that the conventional wisdom is ill-informed or even stupid. It's just that human nature is such that if you hear the same point of view from enough people you respect, you begin to agree with it. Even if it's based on misinformation.

One of the television industry memes that drives me crazy is the argument that somehow streaming giant Netflix is being duplicitous because it doesn't reveal streaming viewer numbers publicly -- or even to its content partners. Rather than recapping that point of view, I'll just point you to this excellent piece from Vulture's Joe Adalian. It's a great read if you're looking to understand Hollywood's fixation on Netflix and streaming numbers:

Perhaps more impressive has been Netflix’s discipline in avoiding the sharing of detailed information with the many big studios, stars, and producers it has partnered with to produce content. “As not transparent as they are to the press, that’s how not transparent they are to us,” one person involved in producing shows for Netflix told Vulture. “They would promise all the time to be more transparent. I heard for months, ‘We’ll give you the [ratings]’ … But they’d keep delaying. They wouldn’t show us.” Or, as another producer told us, “They’re not transparent to anybody.” Even Tina Fey claims not to know much about who’s watching Unbreakable Kimmy Schmidt. “We know that Ted [Sarandos] is pleased, which is great news, but we don't have any actual numbers," the producer/actor told journalists at a news conference for the show last winter.

The problem with all of this is that Hollywood's obsession with Netflix "ratings" misses the point. Yes, it serves the greater good of Netflix not to publicly (or privately) discuss streaming numbers. But more importantly, focusing on those numbers means that Hollywood is missing some issues that should be on their radar.

1) Streaming Numbers Aren't The Primary Way That Netflix (Or Any Other Streaming Service) Defines Success

In another piece on Vulture, actor Adam Pally argues that Netflix's refusal to release viewership numbers is part of an effort to underpay talent:

Still, and I can't stress this enough, I believe in ratings. And I can't stand that the streaming services won't give total access to their numbers. It feels like some kind of way to prevent creative entities from knowing their true worth, and forcing them to work for a number that may be below their value. Though I do admire these same services for their short series orders, solid promotion, and hands-off approach, I would like to know just how much Jenji Kohan means to Netflix, 'cause I'll tell you right now: Daddy knows that bad bitch is underpaid. End of the day, ratings are not the problem. It's how the powers that be react to them that will always be far worse.

That argument would make more sense if viewing numbers had a direct correlation to a show's worth to Netflix. Unfortunately, that doesn't seem to be the case. Yes, Netflix wants people to watch and viewer numbers are one indication of a show's popularity. But I've had several background discussions with Netflix executives in recent months about this very point and they argue that other metrics have a stronger impact on determining a piece of content's value to Netflix.

At the end of the day, success for Netflix is a balancing act between growing (and retaining) subscriber numbers and content costs. Netflix doesn't sell ads, so that subscriber number is the most important metric in the company. And with more than decade's worth of internal data to parse, Netflix has become very good at weighing the factors that give any specific piece of content value. Yes, they want subscribers to watch, but the act of watching a show doesn't have any inherent value to Netflix. What matters are the harder-to-define metrics. Does having the show on Netflix make the service more attractive to viewers? Does it provide buzz, whether or not people end up watching? Does the show help retain subscribers and does the behavior of viewers of that specific show lead to an increase in subscriber satisfaction? How many subscribers actually watch a complete series after sampling the first episode?

These additional factors have some impact on the survival of a linear TV show. But ultimately that success is primarily about ratings. And those viewing numbers are probably #5 or #6 on a list of factors that Netflix uses to determine a show's worth.

2) Unlike Linear TV Networks, Netflix Is A Global Company

Netflix is currently available in more than 60 countries and as a result, the company pushes to gain access to global streaming rights. So your modestly successful sitcom has a lot more value to Netflix if it can stream it in both the U.S. and Argentina. Even if the overall viewing numbers are modest, those episodes can have an inordinately high streaming value because of the global rights. While that global market is well-known in Hollywood, it's also a concept that seems to be under-appreciated when considering the ultimate value of a show.

3) Think Netflix Is Mysterious? Try And Get Basic Numbers From Amazon

Amazon's Prime streaming service is the #2 streaming media service in the U.S. and it is becoming a global powerhouse. And yet the company refuses to release even basic information, such as the number of Amazon Prime subscribers. Another missing metric is the number of Prime subscribers who actually stream video, which some analysts have estimated could be as low as 50%.

Aside from the lack of transparency, Amazon ultimately sees video as another loss leader to be used to promote its free shipping service. Amazon Prime treats its TV and movie offerings like another feature, no different than "free music" or "same day delivery." What sort of message does this send to viewers, whom Hollywood executives worry could begin to see video as just another faceless commodity. Say what you will about Netflix, at least they value their content and give it the best possible presentation.

4) In General, The Media Industry Has Lousy Transparency

It's not just Amazon that refuses to disclose basic benchmark numbers. Streaming platforms ranging from Dish's Sling TV to CBS All Access refuse to discuss subscription figures. While the companies will release a lot of statements touting their "growth," there is no way to properly judge the success or failure of any service that won't even admit how many people are paying a monthly fee to use the service. There is so little transparency in the streaming media world that accurately determining winners and losers is impossible.

In the end, these "Netflix Won't Release Their Ratings" stories are driven by a tangible point of view in Hollywood. It's a problem that everyone in the media industry "knows," although in this case, the real story is a lot more nuanced. While it might be nice to know how many people watch a specific show on Netflix, it's more important to know the other factors that determine a show's value to the streaming giant.