“Those classic brands are fundamentally important — to draw us in, and keep us there,” Peter Csathy, chairman of Creatv, a media and tech advisory firm, says
As Disney, WarnerMedia and Comcast all prepare to challenge Netflix for its streaming throne, their success or failure could be decided by shows that existed long before anyone knew the phrase “binge-viewing.”
Netflix paid handsomely for “Seinfeld,” while WarnerMedia is dipping into its bank account so “Friends” and “The Big Bang Theory” can bolster HBO Max when it debuts next year. NBCU’s newly-named streaming service Peacock is built around reruns of “The Office,” and other classic NBC sitcoms, such as “Parks & Recreation,” “Cheers” and “30 Rock.”
These are strategic, savvy moves, according to analysts and entertainment executives who spoke to TheWrap.
While original content may be the lure that gets subscribers to bite, streaming services — by next spring, the field will have at least five newcomers — can’t rely only on those subscribers liking every new show.
“In streaming, there’s a lot of unknowns,” Devin Griffin, general manager for BET+, the upcoming streaming service from Viacom that launches Thursday, said. Griffin once worked at Netflix, where one of his roles was director of content acquisition. “With any new business, anything that you can leverage that is sort of known, proven and tried and true, is something that you try to take advantage of, so that you can take some of the unknowns out of the model.”
The general consensus is that these series, years after they went off the air, will act as an anchor for the new services as shows fans already know and love. “Friends” and “The Office” will not only draw an audience but, just as importantly, act as a marketing tool for new content. It’s easier to get someone to click on a new show once they’re already on your service, jumping between old “Office” episodes.
“Whether it’s good or bad in the long-run, I think what it demonstrates is the power of known content,” said Bruce Leichtman, president and principal analyst at Leichtman Research Group, on Netflix’s “Seinfeld” deal.
“Seinfeld” represented a unicorn in the TV industry: A classic TV series with a huge episode count that wasn’t tied to a company launching a competing streaming service. And it was a much needed infusion for Netflix as it prepares to ward off numerous challengers to its streaming throne. Peter Csathy, chairman of CREATV, a media and tech advisory firm, said “Seinfeld’s” availability, coupled with the upcoming loss of some of Netflix’s key shows, made it an easy decision to pay up.
“Bottom line — Netflix felt it had no choice but to buy ‘Seinfeld,’ and pay whatever it took to make the deal happen. With ‘Friends,’ ‘The Office’ and many other [shows] exiting Netflix — and entering competitors and wannabe Netflix Killers — ‘Seinfeld’ was one of the few remaining classic evergreen marquee TV titles,” Csathy said.
Apple, which is set to launch its Apple TV+ streaming service on Nov. 1, is the one new entrant that’s bucking this trend. The tech giant, which has shelled out for series starring Jennifer Aniston and Jason Momoa, has avoided established intellectual property to this point. It’s a move that has made some question whether Apple TV+ will pose a real threat to streaming powerhouses like Netflix.
“[Apple TV+] just feels like it’s not a lot of bang for its buck,” said former ABC Daytime President and current UCLA lecturer Brian Frons. “At the moment, there is no strong IP that makes you say, ‘I have to go sign up for this.'”
But Apple may have a point. Having expensive IP on your service doesn’t automatically guarantee customers are going to watch it. What works for one streaming service doesn’t necessarily work for another. For Hulu, which paid $130 million for six years of “Seinfeld,” having Jerry, Elaine and company didn’t factor that largely into what their subscribers were watching.
According to a source familiar with the matter, “Seinfeld” accounted for less than 1% of Hulu’s viewing. Another individual familiar with Hulu’s streaming data described the loss as “not a big deal” since “Seinfeld” has worked for Hulu in the same way “Friends” has worked for Netflix — as a bankable show that is easy for viewers to fall asleep to. When it comes to actually driving new subscribers, the individual pointed out, original shows like “The Handmaid’s Tale” far outweigh the impact of classic series.
But Netflix and other streamers are betting that “Seinfeld,” “Friends” and “The Office” can serve as a go-to digital billboard for original content.
“Those classic brands are fundamentally important from a marketing perspective — to draw us in and keep us there, in the face of so many other SVOD choices,” Csathy added.
Besides, Wedbush analyst Michael Pachter argued that even if “Seinfeld” only accounted for 1-2% of Netflix’s viewing hours, paying as much as $150 million a year for the show would represent about 1% of its $15 billion content budget for 2019. In other words: Despite the seemingly exorbitant price tag for a show that went off the air in 1998, it’s actually a bargain for Netflix.
There’s also an element of deterrence at play. Netflix, by nabbing “Seinfeld,” keeps fans from spending time on competing services. All of the streaming services are fighting for a finite amount of time people can spend watching content. Netflix — where the average subscriber spends 2 hours per day watching shows — isn’t looking to lose a minute of viewing time. “Seinfeld,” either by getting subscribers to watch an old episode or, while being featured alongside one of its original series, driving viewers to Netflix’s other shows, helps accomplish this goal.
“There are certain hallmarks to storytelling and comedy that, regardless of your age or generation, will click with you,” Griffin said. “Trends come back around. We’re definitely in a moment where style-wise, fashion-wise, sensibility-wise, there’s this moment where now the ’80s is cool again.”