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This summer, I updated the article on my data philosophy. While I was rewriting it, I cut a section—which I first wrote three years ago—that argued “We have streaming ratings now!” because, surely, three years on, almost everyone knows that we have streaming ratings now, right?
Right?!?!
On the same day that I cut that section from that article, I read two different people arguing the opposite. In one article, a fellow pundit argued that Netflix has a very complex formula to analyze their shows’ performance, with at least thirty different inputs and, if you add all of them together, carry the one, divide by pi, then Netflix knows what’s a hit, but it’s all secret, and they can’t share it with you. (Which means talent makes less money, but this otherwise talent-friendly, vocally pro-labor-unions pundit didn’t make that connection.)
The other article was an interview with Mark Duplass in Vulture:
“Question: Do streaming’s economics make the bet more difficult to parse? Movie-ticket sales were a straightforward measure. Studios could easily tell if you quadrupled the investment…The numbers are real. But in streaming, it’s very arbitrary, right?
Answer: Right. And if the goal is subscriber retention, it’s hard to tell without access to the data whether Penelope added new young viewers or whatever. I mean, Netflix knows, but you don’t.”
Let’s just be blunt: Penelope flopped. There’s really no metric you could find that outweighs the fact that the entire show grabbed just 3.7 million hours in America over its entire run. (That data point comes courtesy of Netflix’s bi-annual global viewership charts, since Penelope was only available in America, ipso facto, that’s its US viewership in the second half of 2024.)
Now, for some shows, it can be complicated and nuanced…but figuring out whether a show was a hit or a flop can be done! I do it every week! Looking at the last four months of Netflix renewals and cancellations—to be clear, the announcements from the last four months—we can triangulate what constitutes good ratings for a Netflix show, bad ratings, and ratings that are on the bubble, especially since my self-dubbed “The Obliterated Line” remains a very, very good barometer for whether Netflix will renew or cancel a scripted TV show.
Using these metrics, we can also possibly find market inefficiencies…like a recently cancelled Netflix show that I think other streamers should acquire.
This is part one of my regular “Renewals, Cancellations, Un-Orders and Removals” update since 20-May, for the months of June, July, August and September so far. We had so many interesting Netflix shows that I decided to split the update into two parts. I’ll review the rest of the streamers in the next newsletter.
First Off, In Defense of “Hours Viewed”
When it comes to whether Netflix (or anyone, really) is going to renew a show, I’d argue that four factors make up 90 to 95% of the decision:
- US viewership. By “viewership”, I mean total hours viewed by customers. (The US is the world’s most lucrative streaming market. Unlike Europe, the vast majority of residents all speak the same language.)
- Global viewership. (For other streamers, this doesn’t matter as much, but Netflix really, really cares about this. Again, in total hours viewed.)
- Budget.
- Ownership.
Now, I prefer “total hours”, but if you prefer “views” or “completed view estimates” as in hours divided by runtime, that’s fine too. Personally, I’d love to know unique viewers as well, specifically how many customers completed 70 or 90% of a season or film. The point is that you should use some consumption or reach metric as a proxy for viewership in both the US and globally.
What about completion percentage? What about subscriber retention? What about customers who “love” a show?
Based on my personal experience working at a streamer, I can tell you: all those metrics correlate with raw viewership. More viewership equals more unique viewers, higher completion percentage, more acquired subscribers, more retained subs, better customer ratings, and so on. Are they perfectly correlated? No, but pretty damn well correlated. And when you consider “the logarithmic distribution of returns” (or power laws)—the idea that hits are multiples bigger than flops—then those other metrics really don’t matter.
Let’s use Penelope as an example, comparing Penelope to another recently renewed YA Netflix show, Forever, to test whether other factors might matter more than overall viewership. First off, the raw stats:
- Penelope grabbed 3.7 million hours in America (according to Netflix), with no global viewership.
- Forever grabbed over 15 million hours (in just America, according to Nielsen) in its first two weeks, and 124 million hours globally (according to Netflix).
With at least five times as much overall viewership in America in two weeks, there’s almost no metric where Penelope outperformed Forever in America, even accounting for budget. Take subscriber retention (which itself is pretty vague as a metric). Say Forever “retained” 25% of its viewers. Then Penelope will have to retain 110% of its viewers just to keep pace. Same thing for young viewers. Say 100% of Penelope’s viewers were young, then Forever just needs 25% of its audience to be young to beat it. (By the way, no “retention” metric comes close to 100%, that’d be silly.)
I get why Duplass didn’t want to tell the Vulture reporter, “No, I know why my show got cancelled; not enough people watched it,” but that’s why Penelope didn’t get a second season, even with a really low budget.
Way too many people overthink ratings/viewership, and want to believe that there’s some secret formula. Total hours watched metrics will get you most of the way (say 80%) there to knowing if a show was a hit. (If you asked me for perfection, I’d love to have the number of folks who, say, completed 70% of a TV show as well or unique viewers, but again, total hours mostly predicts that as well.)
The Obliterated Line Revisited
We can group TV show performance into three buckets:
- Obvious renewals: Hit shows with such great ratings, especially compared to their budgets, that they’re obviously going to get renewed.
- Obvious cancellations: Or flops. Reminder, in the broadcast TV era in the 90s, 79% of shows survived two seasons or less, and only 11% of shows made 100 episodes or more.
- Bubble shows: The edge cases. “Bubble shows” are as old as TV. They’re the shows that broadcast networks would have to debate over whether they would get renewed, as in “They’re on the bubble.”
What’s a bubble show on streaming? Last year, I invented a new term/concept: The Obliterated Line.
“The Obliterated Line” equates to about 46 million hours of viewership in the US in the first four weeks according to Nielsen for a scripted one-hour Netflix show. Any hour-long drama above that line will likely get renewed, and any show below that line will likely get cancelled. This especially applies to “co-productions”, shows Netflix streams from other major producers like Lionsgate, NBC-Universal or Amazon-MGM Studios. I named it after Netflix’s co-production with Sony, Obliterated, an action comedy that Netflix cancelled after one season despite getting 46 million hours in its first four weeks, which I had thought was a pretty good performance at the time. (For context, that’s 72nd out of 427 TV shows to make the Nielsen charts.)
Let’s put this barometer to the test! (And possibly see if I need to modify it.)
TV Shows Over The Obliterated Line AKA Popular Shows That Got Renewed
We’re just getting started with this issue, but the rest is for paid subscribers of the Entertainment Strategy Guy, so if you’d like to find out…
- Which Netflix show will become their longest-running scripted drama…
- How The Obliterated Line explains almost every Netflix cancellation…
- What recently cancelled hour-long drama was well-above the Obliterated Line and why I think other streamers should buy it…
- Why The Residence got cancelled…
- The higher bar for co-produced Netflix shows…
- Streaming procedurals hit rate in 2025…
- And a lot more…
…please subscribe! We can only keep doing this great work with your support. If you’d like to read more about why you should subscribe, please read this article about the Streaming Ratings Report, why it matters, why you need it, and why we cover streaming ratings best.
