Last Wednesday, the Wall Street Journal published a deeply sourced article about the corporate culture at Netflix. Speaking to more than 70 current and former employees of the streaming service, reporters Shalini Ramachandran and Joe Flint pull back the curtain on a workplace where transparency is valued above all else (except when it comes to being transparent about how many people are watching Netflix original series and movies), where firings are elaborated upon in widely distributed internal emails and “[e]xecutives at the director level and above—some 500 people—can see the salaries of every employee.”
The article also details something called the “keeper test,” just one piece in a glossary of corporate jargon that, assuming it’s not some sort of “grungespeak”-level prank, twists several frequently used terms and phrases beyond their widely accepted meanings. (E.g. “The ‘meme’ on someone at Netflix is their current standing in the eyes of their bosses.”) “Managers are all told to apply a ‘keeper test’ to their staff—asking themselves whether they would fight to keep a given employee—a mantra for firing people who don’t fit the culture and ensuring only the strongest survive,” Ramachandran and Flint write.
In other words: The reasons for a Netflix employee’s termination can be just as nebulous as those for a Netflix show’s cancellation. In the former case, at least those left standing will get a thorough explanation of why they’re down a coworker; your favorite show might not get that luxury. Take the recently canceled American Vandal, whose Peabody Award-winning legacy is now stained with the obscene graffiti of this corporate kiss-off: “American Vandal will not return for a third season. We’re very grateful to the creators, writers, cast and crew for bringing their innovative comedy to Netflix, and to the fans and critics who embraced its unique and unconventional humor.”
But this cancellation isn’t a complete mystery. Like American Vandal’s peerless commentary on class (the kind that’s supplemented by projectile feces), there’s an economic subtext: Netflix doesn’t own American Vandal. It licenses it from CBS TV Studios, which co-produces the true-crime parody alongside Funny Or Die and 3 Arts Entertainment. Netflix has a similar arrangement with its Marvel series, which are the results of a deal struck during the infancy of the streaming gold rush. It was a mutually beneficial team-up: Netflix got six original series out of it, while Disney got some high-profile projects for superheroes from beyond The Avengers’ orbit. But with the cancellations of Iron Fist and Luke Cage and the forthcoming launch of Disney’s subscription service, it’s coming to an end.
There’s a whole esoteric rabbit hole to jump down here, full of FCC regulations dating to the reign of the Big 3 networks and the creation of the massive, legacy-media conglomerates that are now racing to keep pace with moneyed, Silicon Valley upstarts. But long story short, Hollywood is falling out of love with the types of partnerships that led to American Vandal, Iron Fist, Luke Cage, and the earliest waves of Netflix originals. We’re in an era of vertical integration, when broadcasters are likelier to order a show if it comes from a studio with which they share a parent company. All four of the new series ordered by Fox for the 2018-19 season (plus the revived Last Man Standing) hail from 20th Century Fox Television, though that’ll be a whole different can of worms once Disney completes its purchase of all the entertainment assets the Murdoch family no longer wants. If you were looking for a perfect snapshot of the late-capitalist dystopia that is media consolidation in 2018, it’s this: Last Man Standing, a show canceled by ABC because it wasn’t Disney property, was revived by Fox because it was owned by 20th, which will soon be a Disney entity.
The considerations that influence what ends up on your TV screen—advertising revenue, broadcast standards and practices, timeslots—by and large don’t apply to what goes into your Netflix queue. But even if Netflix has the latitude to spend more freely than its competitors, its business still mimics linear TV in one key way: There’s no escaping the question of who’s getting paid for the content. The Economist projects that Netflix will spend somewhere in the neighborhood of $13 billion on a production slate that includes 82 feature and more than 100 scripted series in 2018. But even with that financial wiggle room, it’s just going to keep canceling shows from outside studios—especially as more of those outside studios invest in their own, Netflix-like streaming platforms.
For a while, it was in Netflix’s best interest to keep all of its originals going, regardless of point of origin. It needed to build a library to attract and retain subscribers, and so shows like Marco Polo and Flaked held on past their initial seasons despite their failure to make Orange Is The New Black-sized waves. Eventually, the tides turned: The Get Down, Sense8, and Girlboss were all axed in quick succession last year; coming-of-age dramedy Everything Sucks! was over and out less than two months after its premiere. The about-face, combined with Netflix’s inscrutable metrics for success, have driven some bizarre viewer behavior: As media scholar and A.V. Club contributor Myles McNutt notes, fans of On My Block—which focused, like The Get Down, on a diverse group of kids in an urban setting—were mobilizing a “save our show” campaign within days of the show’s debut. In the current Netflix order, loving one of the service’s series means assuming it’s been born dead.
Prevailing trends aside, Netflix is never going to go 100 percent in-house; at their most ambitious, executives have called for a 50-50 split between Netflix Studios productions and licensed originals. Just look at its most recent moves: A few days after Luke Cage was knocked out, Sony Pictures Television’s Atypical was given a third season. When the American Vandal news broke, Netflix subscribers were acquainting themselves with Chilling Adventures Of Sabrina, which Warner Bros. and Berlanti Productions developed for The CW before it went streaming.
But who’s producing those exceptions is subject to change as more studios wade into streaming. Disney’s direct-to-consumer service is the Death Star on the horizon, its tractor beam locked on Black Panther, Guardians Of The Galaxy Vol. 2, Coco, and other Mouse House hits currently populating Netflix. WarnerMedia is also poised to enter the fray in 2019; the collateral damage of that decision already includes classic-cinema platform FilmStruck and avant-garde comedy arm Super Deluxe, but who knows which WB TV projects at Netflix could follow. (Can one of them please be Fuller House?) When the time comes, Netflix will be able to boast of its algorithm and its familiar interface, but as my former co-worker Todd VanDerWerff points out, in terms of breadth of content, it just won’t measure up. Hence the billions being spent to bulk up that library of originals.
It’s a telling sign that all of this is happening while Netflix’s first major success stories are winding down. The final season of House Of Cards premieres this week; Orange Is The New Black’s will follow next year. Both came from outside studios, a necessity for a business whose previous experience with original content went no further than the Red Envelope Entertainment, which helped bring smaller and independent films to Netflix users’ mailboxes during the mid-to-late 2000s. Speaking to Digital Media Wire ahead of the 2007 Sundance Film Festival, Chief Content Officer Ted Sarandos predicted, “Eventually we’ll be coming to Sundance and saying, ‘We can buy everything.’ There’s a deal for every film.” The article’s actual prophecy shows up one paragraph later, though:
That represents a scary proposition for Netflix competitors. With the company’s January 16th announcement that it would offer free movie and TV programming via internet streaming, it’s clear the company is entering HBO’s territory, but with a key differentiator—its recommendation system—in tow.
And yet, one year later, Red Envelope was no more. Its acquisitions had included Palme d’Or winner 4 Months, 3 Weeks And 2 Days, Oscar winner Born Into Brothels, and Duplass brothers breakout The Puffy Chair, but the division failed to pass the keeper test. It’d be another four years before Netflix streamed its first original series—serving as the exclusive North American home of Lillyhammer, a mob comedy starring Steven Van Zandt—and even then it didn’t make much of a dent on the TV world until House Of Cards rolled out in 2013. The reason for Red Envelope Entertainment’s closure? A 2008 Hollywood Reporter article puts it thusly—an irony fit for the “unique and unconventional humor” of American Vandal: “[T]he company said the reason for its shuttering was that the buys put it in competition with its Hollywood studio partners.”