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An In-Show Promo By Any Other Name: Netflix’s $13 Billion Gamble

There’s a whole lot of “peak TV” out there and most of it is not on Netflix.

That’s not a slam against the service, but rather a cold hard fact, and the likely reason why Netflix just rolled out what it’s referring to as (unskippable) “in-show promos” but the rest of the world refers to as “commercials.”

It’s an understandable reaction to the fact that they’ve just invested $13 billion in original content at a time when more and more people have a long lineup of binge-able TV shows they want to watch and getting them to add yet another series to that growing list gets harder and harder.

They’re doing it too because the powerful recommendation algorithm they put their faith into is no longer quite as powerful, now that people dip in and out of various platforms to watch the series that are on their burgeoning “binge lists” and, as a result, don’t have a whole lot of available bandwidth to care about what else is on.

The “Comfort Food” Factor

If you’re looking for something to watch to kill an hour or two on a rainy Sunday, or, if you’re looking for something the entire family can enjoy, nothing beats the joy of “comfort food TV.”

And by that I mean series like The Office or The Simpsons or Friends. Old school hits where everyone already knows the setup and the characters and watching a random episode (or four) feels like visiting with old friends.  Comfort food series work well too if you’re trying to please a room full of people with diverse tastes (e.g., your average American family.)

The fact that the various networks and studios are looking to take back all the “comfort food” shows they’ve been licensing to Netflix and bring them back to their own OTT apps is the reason why Netflix is now investing that $13 billion in original series.

Which is not a bad plan until you consider the job they have in convincing people to watch all these new shoes. Or at least thinking that they may at some point watch them, to a degree that they keep paying for a monthly subscription.

Comfort food TV is only a part of it.

You’ve got live sports to compete against too. Which, despite what you may have heard about ESPN, is still immensely popular, especially as a way to kill some time on a Sunday afternoon.

Then, over on linear TV, there are all those family friendly HGTV shows, a form of unscripted comfort food that makes spending a few hours with Drew and Jonathan or Chip and Joanna something of a no-brainer.

Watching Off The Grid

The other issue keeping Netflix up at night is that more and more people are effectively avoiding its vaunted algorithm, the one that uses all sorts of higher math to identify the precise shows a viewer will want to watch.

They’re doing that via voice search devices like Alexa, connected devices like Roku and on Comcast’s X1 cable service, where Netflix is baked into the general program guide.

It’s not always the devices either: if you know you want to binge watch Stranger Things, and  Sneaky Pete, Westworld and The Handmaid’s Tale are next on your binge list, you’re not much inclined to pay attention to anything Netflix is recommending for you, at least not this month.

So there’s that too.

The Dangers Of The All You Can Eat Buffet

The other issue Netflix has to deal with in promoting all their new programming is that every show gets released all at once.

That means that unlike many of their competitors (HBO in particular) they don’t have the luxury of four, five, even six month windows in which to create excitement around “this week’s episode” while creating the sort of long-lasting buzz that helps to drive awareness, if not necessarily tune-in.

The flip side of having these movie-like windows is that Netflix doesn’t care when you watch its shows as long as you actually do watch them, or, to be more accurate, as long as you keep subscribing because you think that someday you might want to watch them.

But when series continue to disappear into the ether, it becomes much, much harder to get audiences to watch them once they find them. Because few people will make the investment in a series that only lasted a single season, no matter how good that season may have been. 

That’s where the unskippable in-show promos can help though, by expanding the window during which a Netflix show remains relevant. If they can get you interested enough to watch, and all ten or thirteen episodes are available, it’s unlikely to matter that the show actually dropped four or five months ago.  And if they can get enough people interested to justify a season 2 (and the renewed subscriptions that come with it) then the show is a hit and that piece of the $13 billion becomes worth it.

No Churn, No Burn

Netflix is allegedly spending at least $2 billion on marketing this year. That may sound like a big number, but it’s probably at the lower end of what’s necessary to convince viewers that year-round Netflix is a good idea, that dropping the service for the period between Orange Is The New Black and the next season of Stranger Things is a bad move, because there are a whole bunch of shows on there they won’t want to miss.

That’s likely a much bigger challenge in this age of peak TV than it initially sounds, as viewers bounce from one platform to another as they plow through their binge list, adding and dropping subscriptions along the way.

There’s also the FOMO issue, where despite Netflix’s gamble on smaller, more targeted audiences, people are going to want to watch that next big hit, the one everyone is talking about, and if that show isn’t on Netflix–or if they watched it all in a single weekend bingeathon–then there may not be a reason to keep subscribing, especially when there’s no penalty for dropping out.

At $11/month, Netflix is still a relative bargain, but the key will be to see if Netflix’s algorithm—and the unskippable in-show promos it serves up— is enough to keep viewers from taking months long Netflix vacations.

With $13 billion at stake, that’s a mighty big “if”.