Ever since Netflix began handing out megadeals to Ryan Murphy, Barack Obama, and prince harry, the place has felt like a two-tier system to many creating the content—especially since few of those extravagant deals have yielded much of note. (A new animated series being developed for the platform by Meghan Markle was scrapped in the wake of the earnings report.) The one big bet that’s paid off so far is Shonda Rhimes, whose Shondaland stable has produced buzzy hits with Bridgerton and Inventing Anna. But as an insider points out, most of Netflix’s biggest shows, like stranger things and Squid Game, did not emerge from these kinds of lavish deals: “Those are things that just caught people’s attention and became hits on their own.”
Despite the streamer’s spendthrift reputation, showrunners there find themselves operating under increasingly tight constraints. “They are much more interested in maximizing the audience that they can get on a budget,” says the Netflix executive producer. “That seems to be the current way that they’re really looking at their development and production: How many different corners can we reach for the least amount of money? The days of the blank check are over.”
“I think there are clear signs already that they are paring back,” he says Dade Hayes, coauthor of the new book Binge Times: Inside Hollywood’s Furious Billion-Dollar Battle to Take Down Netflix. “What’s going to be interesting to watch is when a hot property comes along that everybody’s bidding on. They’re gonna have to be much more disciplined than they ever have as a company.”
Even those working on popular Netflix series have felt the pinch, starting well before the fallout of the last few weeks. “Budgets definitely got tighter,” confirms a veteran showrunner I’ll call Showrunner Y. “You think, Okay, now we’ll get the money to really make it the way we want. But it actually tightens up! It’s so antithetical to the way it should run.”
While the company is known for paying its own internal staff very well—sometimes offering double or even triple what the market will bear—insiders say it can be penny-pinching with the writing staff. A common complaint is that it often merges two separate assistant jobs into one for a bargain price. “A lot of showrunners have tried to say: We need one person per one position,” says an insider. “But Netflix has been insisting on these god-awful combinations that are basically burning through assistants and treating them as though they are a renewable resource: When one burns out, you just replace them with the next one.” Netflix had no comment.
The streamer has also normalized the use of what are known as mini rooms. Unlike the traditional writers room—in which TV writers generally are paid to stay on through the production of a series—the far less expensive mini room is a freelance gig that pays a small number of writers to generate scripts for a number of weeks, then sends them on their way. Mini-room writers end up being gig workers, hoping to stitch together enough work to make a living and secure their union health insurance. “But the other problem is that no one’s learning how to do anything,” says Showrunner X. Writers used to learn how to produce the episodes they wrote—going on set, participating in meetings—so that they could eventually step up and become showrunners . But with mini rooms, that doesn’t happen. “I don’t know where this next generation of showrunners is really going to come from.”
The traditional TV model helped writers survive lean times with built-in syndication fees and residuals (ie, payments that talent received each time a show aired). Netflix disrupted that model when it disrupted everything else. After the streamer acknowledged that it was considering an ad-supported subscription option, Rutherford Falls showrunner Sierra Teller Ornelas tweeted“So when Netflix starts offering a tier with commercials, it’s [sic] that regular TV? Does that mean better residuals? Will newer writers NOT have to work in 6 mini-rooms/yr to make what I made ten years ago on one show?”
It’s because frustrations with Netflix have been mounting that its comeuppance was met with unconcealed glee in some quarters of the industry. The company created the streaming television universe, but it’s no longer the uncontested center of it, thanks to the likes of HBO Max, Disney+, Paramount+, Hulu, Apple TV+, and Peacock.
Netflix now must reassess how it lands talent and retains subscribers—and how it can address its reputation as having operated in an unrealistic financial bubble. CFO Spencer Neuman said in an earnings interview last month that Netflix would pull back on “spend growth across both content and non-content spend.” A source close to Netflix clarified that it is actually going to continue to increase its spending on content, but do it more slowly. The streamer’s content budget is estimated at between $17 billion and $18 billion this year, which is still among the highest in the industry. It’s still investing in high-profile projects too, including political thriller TheDiplomat, starred Keri Russell; sci fi epic the Three-Body Problem, created by David Benoff, DB Weiss, and Alexander Woo; and David E Kelley and Regina King‘s Limited Series, A Man in Full.