Binge & Purge

How Netflix Disrupted Their Own Success

All of my pictures are now going to be AI generated and until they let me off the DALL-E waitlist you’re stuck with DALL-E mini.

In many ways, I’m about as typical of an educated, early Millennial, white guy as possible. For God’s sake, I moved to Austin, which is about as cliché as it gets. But for years now I’ve had one glaring hole in my game: I didn’t subscribe to Netflix. Remember that week everyone wanted to talk about Tiger King? I had to sit through those Zooms completely befuddled. Remember that week everyone wanted to talk about Squid Game? There was a lot of nodding and looking at my phone going on then. Long ago I realized that the shows I wanted to rewatch were on other streaming services. I had almost no interest in Netflix’s originals after I had watched the few good ones and got burnt with a lot of cancellations. And the less said about their paltry movie selection the better. So despite subscribing to Amazon Prime, HBO Max, Disney+, Hulu, Peacock, Apple TV+, Paramount+, and Showtime, I drew the line at Netflix.¹

Turns out I am not alone on this either. Since I originally started working on this, Netflix has had some bad days. It lost subscribers for the first time in a decade. Saw its stock price tumble. And even started laying off employees. We’re a long way from the days that Netflix was supposed to be an all-conquering behemoth. What happened? To answer that we’re going to have to discuss the concept of skeuomorphic design.

What is skeuomorphic design? The easiest answer is that it’s about designing user interfaces that mimic real world user interfaces. Go ahead and open up your phone. Pull up your calendar. It probably looks like a desktop calendar would. Pull up your calculator. It’s probably identical to what a physical calculator would look like. That’s skeuomorphic design. It’s mimicking the real world in a virtual space.

But, although this is a concept mainly about graphical design, we can apply the concept behind it much more broadly. I often lament that I was born a decade too young to get in on the “here’s a common thing, but on the internet, now I’m a billionaire” craze. But it’s true that the early internet was largely driven by skeuomorphic development. Look at the world’s richest man. Do you remember the Amazon of the 90s? It was “A bookstore, but on the internet.” The world’s second richest man? Before he became the mogul of real life sci-fi, he spent the 90s getting rich on skeuomorphic projects, most importantly “paying people, but on the internet.” That’s not to downplay either of their success, it’s just, well, Henry Ford these guys ain’t.² Say what you will about Mark Zuckerberg, but even if he didn’t invent social media, you can’t deny that Facebook is a product that is only possible on the internet.³

Netflix originally began in a skeuomorphic fashion: “Blockbuster, but on the internet.” The change came in 2007 when Netflix began offering streaming. The actual concept of streaming was not new, but the ability to stream many movies and television shows on demand was. This was a qualitative change from just being able to offer a slower version of Blockbuster. It also managed to coincide with the rise of binge-watching television.

For some of you younger readers, the idea of binge-watching a television series is so ingrained⁴ that you may not be able to understand how things used to work. In the old days, we received our television from networks. And television networks ran on consistent, predictable, logical, and even comforting schedules. New seasons would start about the time school did. You’d get your season premieres, and new shows would come out. Then each week you’d get a new episode – unless something awful happened like the President addressing the nation – with things really picking up in November for reasons that have to do with arcane advertising sales practices. Come December new episodes would tail off – frequently you’d get a Christmas themed episode first – and there would be special holiday programming. Worried that you’ll miss what Magnum P.I. is up to while you’re busy traveling to the in-laws for Christmas? Don’t worry, Magnum is taking a break and we’re airing something live from Rockefeller Center instead and, frankly, you won’t mind missing it. Then come January your favorite shows were back, with things picking up in February and then reaching a crescendo in May. Then the show was done, and you’d get reruns during the summer. You knew what you were getting when, it had breaks to do things like “enjoy the holidays” or “spend time outdoors and with your family and friends, it’s summer after all you jackasses,” and it was communal. Everyone in your time zone got the same episode of WKRP in Cincinnati at the exact same time.  

That communal aspect was important. I’ve written before about the death of the monoculture, and part of that comes from the death of the classic three network schedule era of television. But you could talk to strangers about television shows because they probably watched the same episode you did. In the dying days of empire they coined the phrase “watercooler show” to describe the idea of people standing around at work the next day talking about last night’s episode. This made shows – to steal a phrase – must see TV. Did you want to be the only person at work who didn’t see what happened on ER?

What you didn’t have was control over what you could watch. Thus, no binge watching. With the rise of VCRs it became possible to watch multiple episodes at your own leisure. Anyone who tried to do this can tell you the problem: VHS tapes could not hold much high-quality video. You may tape an episode to watch later that night, but no one was watching entire shows. It wasn’t until DVD players became mainstream that binge-watching became a legitimate option. My first binge-watching experience was in 2006 with the television show Lost. A friend of mine lent me the first two seasons on DVD and a short time later I was caught up. But even this was still driven by communal experience. I was caught up to watch Season 3 in real time. The first seasons were still shown like normal and the show would continue to be shown that way, right up through its awful final season.

Binge-watching didn’t fundamentally change the consumption, it just altered the creation. Previously, serialization was difficult – although far from impossible. For every Dallas and ER – which had serialized stories – you had far more like Seinfeld, M*A*S*H, or Cheers. This was unfortunate for creators because serialization is wonderful for keeping people hooked. It’s just impenetrable without an ability to catch up. Anyone who was home during summer break and tried to figure out the soap operas their mother or grandmother religiously watched knows what I’m talking about. 

Now, television could be a 13-hour movie, or unfold like a book. Perhaps literally. The most famous of these was Game of Thrones, a show which – through the magic of binge-watching – saw a constantly growing buzz (and audience) right up through its awful final season. But, wasn’t this just a slightly improved version of the old way of consuming television? More convenient, but the same thing.

When Netflix began producing their own content they changed all this. In February 2013 Netflix released their first original series, House of Cards,⁵ directly on their service. No one had seen this before. And all the episodes came out at the exact same time. You could choose to watch the entire season in one day! It’s become so cliché at this point that it’s easy to forget how shocking this was at the time. The delivery vehicle itself was so revolutionary it caused buzz. It was, genuinely, a 13-hour movie.⁶ This was no longer the skeuomorphism of “Blockbuster, but on the internet.” This was a new, internet native way of producing and releasing and consuming content. Bravo to Netflix.

Except, it was probably a bad idea. Sure, it started out great. Netflix rode hits like House of Cards, Orange is the New Black, and Stranger Things. All their competitors copied it. But then, slowly, people stopped copying it. As the flaws of this system appeared – with all content becoming disposable content, endless cancellations, a need for constant content churn, quickly dying buzz, and the hell of spoilers – competitors went back to the old way. When the content titan Disney needed to launch their own streaming service, they had a signature show that fit the general concept: a short, serialized series telling one main story. But instead of releasing The Mandalorian all out once into a world where the IP was at its nadir and hoping for the best, they did it the old fashion way.

And, it did okay. We don’t have actual viewership numbers but industry estimates say it did fine, nothing great. Not as good as Stranger Things. By the end of Season 2 it was the most popular streaming show in the country. It’s a damn phenomenon with cultural cache. A true hit for the streaming era.

This, of course, was how things worked in entertainment. Everyone remembers Seinfeld as a ratings juggernaut, but its third season was 45th in the ratings and its fourth season was 25th. It took years to build before going supernova in popularity. Everyone remembers Smells Like Teen Spirit, the song that changed the entire musical landscape and launched a cultural movement, but it took from August 1991 until January 1992 before it topped the charts. Matt Stoller’s bromide on monopolization in Hollywood – which I’m linking in full because he also attacks Netflix, but from an economics standpoint – makes this same point about movies, particularly Back to the Future. There’s a reason that things slowly build into hits: because consuming entertainment, even if done privately, is communal. It provides us social currency. The binge model destroyed that. If everyone is talking about Game of Thrones or Lost, you can go and catch up and be part of the conversation. If everyone is talking about Tiger King or Squid Game, odds are by the time you catch up it’ll either be passe or you may get a few days of being part of the conversation. Forgetting humans are social animals is never a good business strategy.

The other key factor is that producing quality entertainment is very difficult. A look at the Disney+ release schedule is instructive. Season 2 of The Mandalorian ran from late October 2020 until mid-December 2020. Oh, interesting, it stopped right before the holidays, that seems familiar. Then from mid-January 2021 until July 2022, they ran another eight short run series based on either Star Wars or the Marvel Cinematic Universe (which, as you may have heard, is quite popular). They don’t run concurrently and they leave only a few weeks between them. If you’re a fan of both of those wildly popular IPs, they’ve locked you into almost two full years of subscription off only nine shows. If you took all that content and released it the Netflix way you’ve managed to fill nine weeks.

The “television as an addiction” comparison is an old one, but as anyone who binged The Wire understands, the benefit of addicting people to your product is so they keep giving you money to get more product. But if your product is difficult to create a quality version of, you don’t give it to them all at once and then let them go to another crew to get more. Netflix decided to be suit wearing businessmen and disrupt the whole field with innovation. Disney are just gangsters I suppose, and they wanted their corners.

Television did not need disruption. It’s an addiction because it works. What it needed was a complement. Netflix tried to deliver television in an entirely new manner – native to the internet. HBO and Disney delivered television in a skeuomorphic fashion, but with the convenience of on demand and ability to get caught up. It kept the model where they can keep you hooked for months off one show – building buzz in the process – but they lowered the barrier to entry to try that first hit. They took a time-tested way of doing something and used modern technology to improve its flaws. Just like how Jeff Bezos killed having to go to the bookstore – not the concept of buying books – and Elon Musk⁷ killed having to mail a check – but not paying for something remotely – the internet has given us the ability to fix old processes. In fact, as we look back on the Third Industrial Revolution, it looks like most of the real success stories are just using improved communication and digital information processes to improve long existing models. And the much vaunted “disruption” hasn’t been quite what was promised. What do I mean by this? Well, unlike Netflix, I’m not going to give it to you all at once. You’ll need to tune in next week.

1. I also subscribe to NBA TV, ESPN+, and MLB TV. This seems ridiculous but I actually can justify each and every one of these. Come at me in the comments if you doubt.

2. Although it the tradeoff is losing true innovative genius but gaining an interest in space exploration instead of anti-Semitism, that’s probably a good deal.

3. Interestingly, Zuckerberg is now pivoting to the most skeuomorphic concept possible: virtual reality. “The real world, but on the internet.”

4. In his recent book, The 90s, Chuck Klosterman posits the idea that no one in the 90s would have cared about seeing all of the episodes. This is true but overstated. We all were – by necessity – people who did not have the same relationship with knowing everything that people do now. The technological changes of the past quarter century have altered our very consciousness. But we did care. We just accepted there was no other option. I recall when I was a child there was a Stephen King miniseries called Golden Years which my family became obsessed with. It ended on a cliffhanger, but we didn’t realize it was a cliffhanger. It just wasn’t on the next week. We had no idea what happened (the cliffhanger was designed to lead to a full series which CBS refused to pick up). And we were just okay with this. Every few years someone would bring it up but not knowing what happened was just accepted. My grandmother died twenty years later, never having known what happened! While researching this article I learned the truth from the Wikipedia page. Of course, I texted my mom to let her know.

5. Oh man, talk about a disappointment. I know a lot of people love this show but I tapped out after two seasons, and I rarely stop watching a television show. Unfortunately, I had previously watched the British version, which I highly recommend even if – especially if – like me you did not enjoy the Netflix version.

6. You know I love linking to things, but the only still active link I could find to this was a video of Kevin Spacey. I’m skipping that for obvious reasons. Just trust me on this one. Everyone was saying this.

7. And Peter Thiel! This doesn’t mirror my syntax from earlier in the article but, in the hopes he searches Substack for his name I wanted to give him credit and say please fund me Peter! I’d really appreciate it.