Talking on the Town podcast, Netflix co-CEO Ted Sarandos—who, host Matt Belloni pointed out, has been reluctant to divulge ratings and audience numbers in the past—explained the timing of yesterday’s “What We Watched” engagement report, including why it’s taken Netflix so long to offer this level of data transparency.
“At the beginning [of Netflix], we did not want to lay out the breadcrumbs for future competitors. And also, it really did resonate with talent really positively, that we weren’t going to have the overnight ratings or the weekend box office,” he said. “So there was a lot of positive around it ... it was pretty exotic. You couldn’t compare overnight ratings or ‘live plus seven’ to a perpetually available show where all the episodes dropped at once. So I was concerned that people wouldn’t get the nuance of the difference of the two, so rather than generate comparison—just don’t give it.”
Over time, Sarandos admitted, that lack of data began to “create an atmosphere of mistrust. They thought we were hiding something ... It’s not that mysterious, honestly. As unsexy as this answer is, this business is kind of simple. You make great stuff and if people watch it, you win.”
When it comes to Netflix making decisions about its content, Sarandos said “engagement” is the key factor, calling it “a reflection of joy. It’s a reflection of people being thrilled with what they’re watching. So something long doesn’t add a lot of value unless people, actually, watch all of it ... the one common thread you have when you’re looking for ‘how do you measure success on streaming’ is ‘are people watching?’ ... For us, if people don’t watch Netflix, they quit. So engagement is really important ... We find that it’s the most correlated and the most accurate reflection of how we’re doing in that part of the business.”
Though podcast host Belloni alluded to the WGA and SAG-AFTRA strikes and subsequent union contracts—which both have language requiring more data transparency from streamers—Sarandos didn’t point to that as the sole reason why “What We Watched” was launched, preferring a broader explanation.
“I think we benefit more if people more clearly understand the business,” he said, including the media as well as “agents and talent and the guilds.” It’s also, the co-CEO said, a way to help establish trust between Netflix and creative partners who might have suspicions about why the data hadn’t been released in the past. The report contains “the exact data we use to run things, it’s the exact data that we give the individual creators when they come into it. We give them a lot more layers of detail because we’re partners in making this show work, and we try to help them do that.” He also called the data release “more of a step into the mainstream for what we do.”
It’s important to note that “What We Watched” is a selective array of data, tracking “hours viewed” (at least 50,000 but rounded to 100,000 hours), the premiere date of the film or series, and whether it was available globally, for 18,000 Netflix releases over the past six months. It does not break down, for instance, country-by-country numbers, and Sarandos’ comments about that suggest those details won’t be forthcoming. “It goes back to the old answer which is, this is a ton of data—and by the way, it’s a pretty heavy lift compiling this just for distribution,” he said. “We have the top 10 that comes out constantly that you can kind of fill in some of the blanks in-between the bi-annual release of this data, and I think all the country-level things and all those things are all still very rich intelligence for competition down the road. We don’t disclose even country-level subscribers.” The bottom line: Netflix doesn’t want its competitors to know too much.
The rest of the podcast digs into whether other streamers will follow Netflix’s example in releasing engagement reports—and how these reports might affect competition between platforms—as well as license sharing with seemingly rival companies like Disney and Warner Bros., some reflection on Netflix’s international presence, and a discussion of Netflix-produced feature films (with a big plug for current release May December), among other topics. Listen to the full episode of The Town with Matthew Belloni here.