Sponsored by

Welcome to Lowpass! This week: The power of Netflix’s catalog, and Lowpass gets its own version of Wrapped.

This week’s Lowpass newsletter is free for all subscribers; next week’s main story will only go out to paying members. Upgrade now to not miss it.

Netflix’s competition still doesn’t understand streaming

Remember The OA? Yes, I’m talking about the short-lived Netflix sci-fi show whose main characters discovered that they could open up portals to other worlds with the power of interpretative dance.

The OA was strange, mesmerizing, and a hit with critics, with some calling it one of the best TV shows of the past decade. It also was slow to catch on with viewers, leading Netflix to cancel the show after just two seasons in 2019, despite the fact that the show’s creators had planned to tell the OA’s story over a five season arc.

Even with its untimely ending, The OA has some remarkable staying power: During the first six months of this year, Netflix audiences around the world spent 24 million hours watching The OA. That’s more time than people spent watching Netflix’s Gilmore Girls revival, the streamer’s blockbuster hit movie To All the Boys I’ve Loved Before, or even the first three seasons of the broadcast TV show Friday Night Lights combined, during the same time. That’s all according to a massive viewership report Netflix released earlier this week, detailing viewing hours for thousands of titles for the first six months of this year.

But this story isn’t about shaming Netflix for canceling The OA. Instead, it’s about the power of catalog titles, which many of Netflix’s biggest competitors are still unequipped or unwilling to tap into.

Netflix’s competition has been on a culling spree. A number of streaming services have either resold or completely canned some of their originals in recent months. HBO shows like Insecure and Six Feet Under are now streaming on Netflix, while Starz picked up and renewed Max’s Minx. Dangerous Liaisons, American Rust and Love Life have all but disappeared from the streamers, and may or may not make brief appearances on ad-supported streaming services in the future. 

This practice is often being attributed to quirks in Hollywood accounting that make it possible to shore up balance sheets by writing down unsuccessful titles, as well as an attempt to revive TV windowing (the practice of licensing a show to multiple parties in succession) in the streaming world. However, a closer analysis of Netflix’s data shows that by doing so, streamers leave a large amount of potential viewing on the table.

To get a sense of the popularity of catalog shows on Netflix, I cross-referenced a Wikipedia list of original Netflix dramas that were either canceled or concluded with Netflix’s viewership report. And since I wasn’t interested in anything that had been canceled recently, I decided to just focus on shows that ended before January 1, 2020. This turned out to be 25 shows total. The old stuff, basically – which still is immensely popular.

Netflix viewers spent over 800 million hours watching these somewhat dated dramas in the first six months of this year. A good chunk of that was unsurprisingly driven by the Netflix hit Orange Is the New Black, which accounted for 217 million viewing hours, followed by Narcos with more than 125 million hours. However, there were also some notable surprises:

• House of Cards came in third in my analysis with close to 70 million viewing hours. The show was a huge deal when it debuted on Netflix a decade ago. However, it has arguably been a headache for the company, and something Netflix hasn’t actively promoted, ever since sexual misconduct allegations against Kevin Spacey surfaced in 2017. 

• It probably would have been easier for Netflix to cancel the show, or quietly remove it from the service after it concluded. But judging by the now-released viewing data, it’s still pretty popular with viewers.

• Even excluding the aforementioned top 3 shows, the other 22 Netflix dramas that ended or got canceled during the last decade still amounted to close to 400 million viewing hours.

• Some long-canceled Netflix originals appear to be more popular than licensed seasons of popular broadcast TV shows. Sense8 for instance, which consisted of 24 episodes total, easily surpasses some seasons of licensed network shows like New Girl, The Good Place, Superstore and Grey’s Anatomy with similar numbers of episodes. 

• That goes against the long-held belief that Netflix needs this type of “comfort fare” of well-known, licensed TV programming to attract viewers for habitual viewing. Remember when people argued that losing Friends and The Office was going to doom Netflix?

• It’s also worth noting that I only looked at a small subset of Netflix’s catalog. The same Wikipedia page I used to identify those 25 titles lists dozens of additional original dramas from around the world, as well as a significant number of comedies, kids shows, unscripted programming and more.

• Given that just 25 old dramas alone accounted for 800 viewing million hours, it’s safe to assume that catalog titles that other streamers might have taken offline to relicense or mothball accounted for several billions of hours of Netflix viewing during the first half of this year.

• Netflix executives said during a press call this week that the data covered in the company’s new engagement report captured close to 100 billion viewing hours. 55% of its viewing during the first half of 2023 came from originals, while 45% came from licensed shows.

Netflix co-CEO Ted Sarandos was actually asked during that call whether the company would ever consider licensing its originals to other services, just as Netflix has been licensing HBO shows in recent months. Here’s his reply in its entirety:

“A show like Suits, which has played on USA for a long time, has been available on Peacock, and had been available on Amazon a couple of years before it hit Netflix. And yet, we have been able to unlock this enormous global audience for it. That’s the combination of our large subscriber base and our recommendation system that knew to put Suits in front of people who are going to love it the most. That’s a reflection of what we do best.

I do not think that that would necessarily happen in reverse, that other outlets would have a better chance finding more viewing for the programming we have on Netflix, which is why we don’t do it.”

Sarandos touched on two important truths there: Licensing originals to other streamers can actually help grow audiences, especially for shows that are still “on air.” However, once a service reaches a certain scale, luring in audiences with freebies becomes less relevant. Instead, it becomes all about keeping your audience engaged to reduce churn. 

Catalog titles can play a big role on that quest – and any company building a streaming service to compete with Netflix on a global scale does itself a disservice if it gets rid of its older shows in favor of small amounts of incremental revenue.

And now excuse me, I gotta go rewatch The OA.

Wow

Beehiiv, the company that powers this newsletter, just launched a Spotify-like Wrapped feature, and I gotta say I didn’t expect some of those results:

• I published over 66,000 words in this newsletter this year, according to this data.

• Lowpass generated a total of 586,000 impressions, including 230,000 with this single post. Apparently, people really do care about Google TV.

• My second-most popular story this year was the Telly scoop.

• Close to 74% of all Lowpass readers are in the US, followed by the UK with 10%, and Canada with 1.45%.

• My open rate for the year was 32.3%, which I’ve been told is above average. Thanks for reading, everyone!

Data overload: My growth stats have long been a little wonky, since I tested out Beehiiv with just a few hundred subscribers earlier this year before officially launching with the subscriber base of my former Protocol newsletter in April.

Beehiiv’s version of Wrapped now says that the newsletter grew “1857900.00%” this year. Not entirely sure that’s how that works, but I’ll take it — even though it will be hard to beat those numbers next year 😊

What else

Apple is pushing musicians to use Dolby Atmos. Apple Music will “more heavily weigh” songs also offered in the immersive audio format, according to Bloomberg.

TV network Cheddar may get sold for $0. Altice, which acquired Cheddar for $200 million in 2019, is in talks to transfer the network to private equity company Regent LP for free, with the possibility of up to $50 million in future “earn-outs.”

Apple’s AirPlay in hotel rooms is delayed until 2024. That’s according to the latest update to Apple’s iOS 17 page, as spotted by MacRumors.

Xbox Cloud Gaming goes live on the Meta Quest. First announced at Meta Connect, Quest owners can now play hundreds of Xbox games on their headsets.

Epic prevailed in its lawsuit against Google. A jury found that Google’s Play Store policies amount to a monopoly. Now, a judge has to decide the remedy.

E3 is officially dead. There hasn’t been a real E3 since 2019, and there won’t be one ever again.

Apple may get fined by EU over its App Store rules. The EU is set to side with Spotify in its investigation of the App Store, and could impose fines against Apple.

Bose is done making smart glasses. The company’s Frames wearable is being discontinued. This comes after Bos shut down its audio AR efforts, as I was first to report three years ago.

Pico reportedly cancelled its next headset. ByteDance’s VR subsidiary won’t be making a Pico 5 after all, according to The Information.

SPONSORED: Your link here, for $99. Want to reach close to 19,000 AR, VR and streaming insiders? Then check out our new sponsored links opportunity.

That’s it

It was bound to happen: AI Santa is here, courtesy of Fixie, a startup that specializes in conversational AI agents. Fixie’s new Hi Santa site lets you have audio calls with AI versions of Santa, Mrs. Claus, Rudolph or Elfie, and I have to admit it’s quite impressive, save for one curiosity: AI Santa doesn’t seem to know how to end phone calls, so you can literally spend forever saying good-bye to him. Which is concerning: With nonstop palaver, how is he possibly going to deliver all those gifts?

Thanks for reading, have a great weekend!

Image courtesy of Netflix.