How can Netflix spend so much for original content and still make money?

In the short term, they can’t.

In 2017 Netflix reported a profit of $500 million. But they had to take on $2 billion in debt to make it happen.

This is due in part to the fact Netflix is spending $5-$10 million per episode for some of their more popular series.

While this clearly does not yield the greatest short-term fruit (creating your own content is a long-game activity) I’m more excited about how the new economics of television can lead to more creative freedom.

Beyond the ability to play with many millions of dollars for each episode to hire the best actors, build fantastic sets, etc… creating TV for streaming platforms like Netflix/Amazon where the entire season is released at once rather than shown every week over the course of months means you can revise.

because we don’t launch week-to-week, there is the built-in benefit that halfway through the season or towards the end of production, especially in a new series, once they’ve found their sea legs and know their characters’ voices and the actors, there’s the ability to go back and reshape some of the earlier episodes if it’s something the creator wants to do.

Additionally, I hope when producers/writers write for streaming series, they cut out more of the rushed character development at the beginning of series and much of the summarizing that happens at the start of episodes. Because viewers tend to treat an entire season like a single movie (by bingeing it), creators shouldn’t have to worry about making sure we’re all caught up with the plot, or hastily establishing a character’s persona right away.

Apparently there’s also a “leap of faith” that happens when you produce an entire season of a show for the streaming platform. When a show is airing every week, producers have the opportunity to listen to viewer feedback and record future episodes with that in mind. Yet, Netflix and Amazon producers have no such luxury, and thus have to fully commit to whatever they put into a show. This may be riskier for the them, but in theory I think this should make for bolder TV and better programs for all.

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