Stranger Things Just Happened to TV

There are strange things afoot in the television industry. In July, Stranger Things, Netflix’s nostalgia-fest sci-fi horror mini-series, took over the collective mindshare of the internet after being rejected by 15+ major cable networks. Two weeks later, NBC’s network coverage of the Olympics turned live sports broadcasting -- the golden child of the major networks -- into an albatross after an excess of ads and live-sports delays frustrated audiences.

So what’s going on here? The networks have received a fair heft of blame and ridicule for all of this, but, in truth, there are larger forces at work.

Why the Networks Passed on Stranger Things

Let’s start with Stranger Things. First off, it’s a great show and if you haven’t seen it yet, go do so now. But more than just being great TV, Stranger Things hints at the new structure of content consumers want to see (i.e. long-form movies) and how the television networks are ill-suited to provide it.

In a recent interview, the creators of Stranger Things describe how they were turned down by various networks. What becomes clear in reading the interview is that the networks were never in a position to take a chance on Stranger Things -- it didn’t align with their incentive system.

When revenue comes from advertisers, a network has to take into account a certain set of questions when considering potential shows:

  • Who is the intended audience? TV networks need a clear target demographic for a show that they can use in discussions with advertisers. Stranger Things, a show about kids but targeted at adults, probably sounded iffy.
  • How will the content vibe with sponsors? I don’t think Stranger Things was scarier or more violent than some of the other shows on network TV, but its nostalgic sci-fi vibe might have thrown off network execs.
  • Does the show’s structure and pacing lend itself to advertising? For many cable networks, a hit show is one that audiences love and the network can stretch to 20+ episodes a season. This means that, in the eyes of the networks, an eight episode mini-series like Stranger Things can’t have the same value as other long-running shows because it provides a fraction of the ad inventory.

Beneath all of these questions is an underlying compromise between a network’s two customers: advertisers and viewers. It’s impossible for a network to prioritize content that’s streamlined for a viewer -- that content would mean no ads. Instead, networks end up with programming like Lost where the show’s tenure is extended longer than necessary and filler episodes and tangential plots weasel into the lineup.

The New TV

Compare this to Netflix. The only customer Netflix cares about is its subscribers. When you don’t have to worry about advertisers, certain trends emerge in your content.

  • Content gets shorter. People value their time.
  • Content gets darker. There isn’t a sponsor fretting over violent associations.
  • Content gets more specific. No need to appeal to the broad audience of networks, just to a specific niche within the Netflix audience base.
  • Content is always available. There’s already been a lot written about the disruptive non-linear programming model that streaming services bring to TV. I won’t rehash it here other than to say it’s something that eluded the traditional networks because of their ties to advertisers.

Stranger Things is an example of all of these trends. So is True Detective*. My hunch is that as more viewers move to a streaming-service-only reality, we’ll see more content fit into the mold defined by these long-form movies masquerading as mini-series.

What's Left for Networks

While streaming services cast aside the interests of advertisers, the networks are now burdened with a revenue model supported by advertising and affiliate fees, both of which are jeopardized by the new streaming industry. Advertising by the fact that as network-produced content gets less popular with viewers, it becomes less appealing to advertisers. Affiliate fees by the fact that as cable TV becomes less appealing to viewers (since the content they want is on streaming services) those viewers will cancel their cable bills, decreasing the overall size of the affiliate fee pie.

Getting squeezed from both sides, the networks have no choice but to try to maximize ad revenue on the content that is still valuable to viewers. That is, live sports.

Cue the NBC Olympics.

If you’re still catching up, NBC received some criticism on its NBC Olympics coverage.

“...such is the onslaught of adverts - from McDonald's and United Airlines to Hillary Clinton's campaign and Mini cars - that critics have renamed the network Nothing But Commercials.”

Twitter, too, chimed in on commercials during the Opening Ceremony, an especially difficult segment for viewers.

NBC is certainly the lightning rod in this scenario, but as I mentioned at the beginning of this post, there are other parties involved. As an Olympics viewer, who are we to blame, the network that supplied excessive ad inventory for the Opening Ceremony, or the advertisers that demanded it?

We’re in a transition period where traditional advertising is still working to catch up with consumers. Ad execs still push the majority of spend to TV spots, while viewers (cord-cutters and otherwise) try to find live streams of their favorite events on Google, Snapchat discover, and Twitter moments.

All hope is not lost for the networks, they still have great live content that viewers want. But if they’re to succeed in this changing landscape of content and media, they need to embrace new channels, not try to force viewers into old ones.

Go watch Stranger Things.