 Like a third season of a Netflix show. Yikes. There's a good chance that one of your favorite shows on Netflix is already canceled. Netflix is facing a series of issues that they didn't face even five years ago. They've got looming competition from some of the biggest players in entertainment today. They also just announced that they lost subscribers in the United States for the first time in nearly a decade. And because of all this, Netflix has to do something that it really didn't have to up until now. Start acting like a cable network and cancel shows. Remember when Netflix was like super exciting? Every show that came out felt like a blockbuster release because everything about it felt really cool and unique. Netflix came in and essentially Beyoncé'd the heck, can I say hell? Beyoncé'd the hell out of TV by dropping entire seasons at once. This is something that only a network on the internet could do, no one else could. By 2015, Netflix was like this hotbed for creators. Everyone wanted to work with them because Netflix was doing some cool things. Orange is the new black! Orange is the new black, House of Cards, and even unbreakable Kimmy Schmidt were being nominated for and winning Emmys. The company's content budget grew every single year, which let them take chances on weirder projects. The Wachowski sisters, best known for The Matrix, had a sci-fi series which reportedly cost Netflix nearly nine million dollars an episode. That's on par with some of Game of Thrones' episodes. Netflix had one major advantage, it was the only player in the game. Most importantly, if Netflix was winning Emmys, it proved to everyone, including major networks like ABC and CBS, and also prestige networks like HBO, that internet TV was actually a thing people should pay attention to. But that's simply not good enough anymore. By 2020, Netflix is gonna have major competition from some of the biggest companies in the world. Apple, Disney, Comcast, NBC, Universal, and AT&T's Warner Media are all launching streaming services. And in order for them to compete with Netflix, they're removing their own content from Netflix. Meaning if you wanna watch Friends, you have to go to HBO Max, Warner Media's streaming service, in order to do it. I can't even begin to explain to you how much I am gonna miss you. With less licensed shows, Netflix has to invest in more original content in order to keep subscribers. Netflix relies on something called the efficiency metric. Basically, Netflix puts more of an emphasis on shows that can bring in new subscribers or keep those who are at risk of canceling. That makes it harder to justify renewing a series. How many people are gonna subscribe to Netflix for a third season of The OA if not many people watch the first two seasons? The way executives see it, that money would probably be better spent on a new series, particularly in an emerging market that's not the United States. Basically, the United States is oversaturated. Everyone in the US who's going to have Netflix probably already does. But there are huge markets in East Asia or South America that are clamoring to sign up for the service. That might explain why you're also seeing more Bollywood films or South American soap operas on your service. But Netflix's investment in other series doesn't stop fans from hurting when their favorite show gets canceled. Take Tuca and Birdie. That show was critically adored and had a dedicated fan base, but unfortunately it just wasn't big enough. Creator Lisa Hanawalt even tweeted that it just didn't have the sizable viewership it needed for Netflix to renew it. What's interesting and unique to Netflix is that Hanawalt blamed the algorithm. It's unclear just how many people were actually served the show on their homepage. Unlike traditional cable, which slots shows into one specific spot every week, Netflix is more like YouTube. There are so many shows, movies, and specials that Netflix relies on a recommendation algorithm to try and pair viewers with things they'd be interested in. It doesn't always work. It's not like Netflix isn't interested in investing in creators or original shows. It's just about to get much more focused. The company is investing hundreds of millions of dollars into specific creators that they think can deliver guaranteed hits. You've got David Benioff and D.B. Weiss who created Game of Thrones coming to Netflix for $250 million. Ryan Murphy, the creator of American Horror Story, he's coming over for $300 million. And Shonda Rhimes, the creator of Grey's Anatomy, one of my favorite shows, is coming over for $150 million. So it's not all bad news. Netflix still needs new shows and is clearly still willing to pay for them. There's a good chance that weird niche TV is still going to wind up on Netflix. It's just that based on everything we're reading and seeing, it's likely that it's gonna come from someone like J.J. Abrams. There's still shows that can make the case for renewal past the third season, but those are increasingly becoming the exception to the rule. One of those shows is Stranger Things, which third season saw more than 40 million people watch it in just four days.
 Like a third season of a Netflix show.
 Yikes.
 There's a good chance that one of your favorite shows
 on Netflix is already canceled.
 Netflix is facing a series of issues
 that they didn't face even five years ago.
 They've got looming competition from some of the biggest
 players in entertainment today.
 They also just announced that they lost subscribers
 in the United States for the first time in nearly a decade.
 And because of all this, Netflix has to do something
 that it really didn't have to up until now.
 Start acting like a cable network and cancel shows.
 Remember when Netflix was like super exciting?
 Every show that came out felt like a blockbuster release
 because everything about it felt really cool and unique.
 Netflix came in and essentially Beyoncé'd the heck,
 can I say hell?
 Beyoncé'd the hell out of TV
 by dropping entire seasons at once.
 This is something that only a network
 on the internet could do, no one else could.
 By 2015, Netflix was like this hotbed for creators.
 Everyone wanted to work with them
 because Netflix was doing some cool things.
 Orange is the new black!
 Orange is the new black, House of Cards,
 and even unbreakable Kimmy Schmidt
 were being nominated for and winning Emmys.
 The company's content budget grew every single year,
 which let them take chances on weirder projects.
 The Wachowski sisters, best known for The Matrix,
 had a sci-fi series which reportedly cost Netflix
 nearly nine million dollars an episode.
 That's on par with some of Game of Thrones' episodes.
 Netflix had one major advantage,
 it was the only player in the game.
 Most importantly, if Netflix was winning Emmys,
 it proved to everyone, including major networks
 like ABC and CBS, and also prestige networks like HBO,
 that internet TV was actually a thing
 people should pay attention to.
 But that's simply not good enough anymore.
 By 2020, Netflix is gonna have major competition
 from some of the biggest companies in the world.
 Apple, Disney, Comcast, NBC, Universal,
 and AT&T's Warner Media are all launching streaming services.
 And in order for them to compete with Netflix,
 they're removing their own content from Netflix.
 Meaning if you wanna watch Friends,
 you have to go to HBO Max,
 Warner Media's streaming service, in order to do it.
 I can't even begin to explain to you
 how much I am gonna miss you.
 With less licensed shows,
 Netflix has to invest in more original content
 in order to keep subscribers.
 Netflix relies on something called the efficiency metric.
 Basically, Netflix puts more of an emphasis
 on shows that can bring in new subscribers
 or keep those who are at risk of canceling.
 That makes it harder to justify renewing a series.
 How many people are gonna subscribe to Netflix
 for a third season of The OA
 if not many people watch the first two seasons?
 The way executives see it,
 that money would probably be better spent on a new series,
 particularly in an emerging market
 that's not the United States.
 Basically, the United States is oversaturated.
 Everyone in the US who's going to have Netflix
 probably already does.
 But there are huge markets in East Asia or South America
 that are clamoring to sign up for the service.
 That might explain why you're also seeing
 more Bollywood films or South American soap operas
 on your service.
 But Netflix's investment in other series
 doesn't stop fans from hurting
 when their favorite show gets canceled.
 Take Tuca and Birdie.
 That show was critically adored
 and had a dedicated fan base,
 but unfortunately it just wasn't big enough.
 Creator Lisa Hanawalt even tweeted
 that it just didn't have the sizable viewership it needed
 for Netflix to renew it.
 What's interesting and unique to Netflix
 is that Hanawalt blamed the algorithm.
 It's unclear just how many people
 were actually served the show on their homepage.
 Unlike traditional cable,
 which slots shows into one specific spot every week,
 Netflix is more like YouTube.
 There are so many shows, movies, and specials
 that Netflix relies on a recommendation algorithm
 to try and pair viewers with things
 they'd be interested in.
 It doesn't always work.
 It's not like Netflix isn't interested
 in investing in creators or original shows.
 It's just about to get much more focused.
 The company is investing hundreds of millions of dollars
 into specific creators that they think
 can deliver guaranteed hits.
 You've got David Benioff and D.B. Weiss
 who created Game of Thrones
 coming to Netflix for $250 million.
 Ryan Murphy, the creator of American Horror Story,
 he's coming over for $300 million.
 And Shonda Rhimes, the creator of Grey's Anatomy,
 one of my favorite shows,
 is coming over for $150 million.
 So it's not all bad news.
 Netflix still needs new shows
 and is clearly still willing to pay for them.
 There's a good chance that weird niche TV
 is still going to wind up on Netflix.
 It's just that based on everything we're reading and seeing,
 it's likely that it's gonna come from someone
 like J.J. Abrams.
 There's still shows that can make the case
 for renewal past the third season,
 but those are increasingly becoming
 the exception to the rule.
 One of those shows is Stranger Things,
 which third season saw more than 40 million people
 watch it in just four days.