The Slow Death of Hollywood (Guest Blog)

The current streaming wars are a story of technology, but also a story of public policy levers enabling corporate concentration and the resulting abuse of market power

Earlier this month, The Information published an article on Netflix’s new spending patterns on content. There’s an important tidbit in the piece, which suggests that a new era of control and centralization in Hollywood will soon be upon us:

“[Netflix] now routinely ends shows after their second season, even when they’re still popular. Netflix has learned that the first two seasons of a show are key to bringing in subscribers–but the third and later seasons don’t do much to retain or win new subscribers.”

So the company is trying to get new subscribers and wants to keep old subscribers just happy enough to not quit the service. And there’s this other tidbit:

“Ending a show after the second season saves money, because showrunners who oversee production tend to negotiate a boost in pay after two years.”

This passage, and the whole article, is framed by the notion that Netflix is becoming more budget conscious and metrics-driven. But really Netflix’s strategy is straightforward market power exploitation. The company is cancelling shows that subscribers like so it won’t have to pay creators the amount they would otherwise be able to get for making good commercially successful art. In…

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Matt Stoller

Matt Stoller is a fellow at The Open Markets Institute. His book, "Goliath: The Hundred Year War Between Monopoly Power and Democracy," will be published in October 2019 by Simon & Schuster.