Netflix's Deals with Producers and its Impact on the Channels. A Podcast with John Ford, GM of the NPACT Producers' Association

This week’s podcast covers Netflix.

Our focus is on its deals with producers.
And on how the channels’ deal terms are evolving in response to the rise of the online video platforms.

Sharing his experience is veteran programming executive John Ford.

John is an extremely well-placed analyst of the market in his current position as General Manager of NPACT, the association of U.S. factual producers.

Listen in! John has a lot to share…

PODCAST

The Chart

Source: Statista

About John Ford

From 1989-2003, John held senior executive positions at Discovery, including president of content for Discovery Networks, US, and executive vice president & GM of TLC. He led TLC from 1991-99.
From 2003-2007, he served as executive vice president of programming at National Geographic Channel.
Read more about John here

NPACT

NPACT serves as the voice for the non-fiction creative community in North America.
Its 100+ members include production companies of all sizes, as well as allied services companies.
It helps producers tackle the challenges they face in an age of media disruption, and offers a forum for producers to address critical business issues.
Members collectively produce the vast majority of all non-fiction content for US broadcast, cable television and digital platforms.
Read more about NPACT here.

TRANSCRIPT: EDITED VERSION

John Ford’s general thoughts about Netflix

Netflix has come into the marketplace with a roar.
They are trying to work in a more producer-friendly way.
Netflix isn’t beholden to the commercial rhythm of network television based on time restrictions and ratings-driven advertising, so producers have more freedom.
Netflix has an appetite for high-quality unscripted work.

Peter: Traditional channels are under economic pressure because of cord-cutters, cord-nevers and lower ratings. My feedback is that they are cutting budgets and pipelines for originals. Does Netflix’s volume of content make up for the smaller amount of programming on cable channels today?

John: In short – not yet.

To clarify, the networks have gone for shorter orders of a given show, but still need more hours overall.
It used to be that if you had a show that worked, you could guarantee a very slow decline in ratings for repeats.
Now, with advent of Netflix and DVRs, people have original content reserved for them whenever they are ready for it.
There is a huge decline in the value of the repeat show.
Networks actually need more new hours than they did in the past because of this decline.
Now, instead of ordering ten episodes of a new show, networks will order fewer because they are fearful of a lack of success. This is hard on producers. The deals are tougher.
However, networks can sell to streaming services and get income back that way.
Networks are also expanding overseas in markets that are still growing.
Netflix’s development process goes pretty quickly because they know what they want.
But their business practices aren’t quite as up to date.

Peter: It used to be that Netflix liked projects with built in press or A-list talent. Is this still the case or are they moving into different areas?

These days you don’t have to be an A-Lister.
Netflix does want programming to have a global appeal.
Producers usually get an up-font commission, but don’t get much on the back end.

Peter: If you are a German producer, for example, and already have a presale to a local network, can you still go to Netflix?

John:

Netflix could geo-block the programming in Germany, but they tend to be less interested in sharing content.
However, if the project is courted by many groups, Netflix might cut a deal.

Peter: What about commissions vs. acquisitions?

John:

Netflix wants to distinguish itself in the TV community – they are seeking awards.
The ratio of originals to acquired shows: more original shows than acquired shows.
Netflix is incorporating reality and lower-cost unscripted series into their programming, much like networks have done in the past.
They can’t only commission 10-million-dollar series like the Crown. They would run out of money.
Factual series are more affordable.

Peter: About ratings – Netflix is a proprietary closed system. Is that frustrating being unable to get information from them about ratings?

John:

We are always asking “How are we doing?”
We would like to see clear viewing data, but Netflix doesn’t share them at this time.
Nielsen is trying to get at Netflix data, but it isn’t widely available.
If you don’t have advertising, you don’t have a need to measure – Netflix doesn’t have a third party need to confirm audience size.
But if producers say they need to know how they are doing, maybe it will put pressure on Netflix.

Peter: Are you finding that Netflix is open to conversations with NPACT on behalf of producers?

John: