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So, Ronnie. Yeah. I'm going to tell you a story. Okay. About a man who was crucial to the evolution of Netflix's streaming business. Go for it. Okay. He's middle-aged. He's an underachieving high school chemistry teacher. Gets cancer. Oh, I know where you're going with this. Really? Yeah, it's Breaking Bad. I am describing Breaking Bad to you. I'm thinking maybe you and I could partner up. You want to cook crystal meth?
And the reason why I'm telling you about Breaking Bad is because it was really important for Netflix and the TV business and the relationship between the two. It's a perfect example of what we call the Netflix effect, the ripples and waves that Netflix creates in the entertainment business and in culture. Welcome to Land of the Giants, the Netflix effect. I'm Peter Kafka. And I'm Ronnie Muller.
Netflix has been the single biggest disruptor Hollywood may have ever seen. So today we're looking at how Netflix's approach to movies and TV shows has evolved and how along the way it's become the dominant force in entertainment. Okay, Ronnie, let's go back to Hollywood about a decade ago. Netflix was just starting to stream TV shows and movies and it needed more stuff to stream. Turns out there were lots of people, people running big TV networks and movie studios, who were more than happy to sell Netflix their leftovers. That was 2008.
2009, and the entertainment industry was really suffering because of the economic downturn, and they needed cash to make their quarterly numbers. This is Gina Keating. She's a journalist who covered Netflix for Reuters and wrote a book about the company. This idea that they could, you know, sell these TV shows that nobody wanted to see and these movies to Netflix streaming seemed like this brilliant idea.
She and I both remember that after the studios loaned out what felt like a ton of mediocre stuff to Netflix, something unexpected happened. Netflix users began to discover shows that were actually good, hidden gems, and they started binge-watching them. Who the hell are you? You know. You all know exactly who I am. Now, say my name.
You know, actually, a show that was really formative for them was Breaking Bad. Breaking Bad becomes this huge phenomenon off the back of Netflix. That's my colleague Emily Vanderwerf, who covers TV and pop culture for Vox.com. Netflix users found Breaking Bad after it had been a niche show for AMC for a couple of seasons. They watched the old shows on Netflix, and then they started watching the new ones on TV. And by the time the show's last season rolled around, Walter White had become the new Tony Soprano. Yeah.
You asked me if I was in the meth business or the money business. I'm in the empire business. The antihero America was rooting for and felt bad about at the same time. Breaking Bad was event TV in an era when event TV was going away. What happened on Netflix was changing what happened on television. What does that have to do with the DEA? They're after some mystery man, some...
heavy hitter. It goes by the name Heisenberg. In its last eight episodes, which aired in one chunk in 2013, it just exploded. Like it just was the biggest thing on TV for those eight weeks. And it was because people had watched them all. Netflix helped Breaking Bad increase its audience on AMC as the series went on. The exact opposite of what usually happens with most TV shows where audiences melt away over time.
For the season four finale, Breaking Bad pulled in less than 2 million viewers. But two years later, for the series finale, the audience had grown into 10 million people. This was great for AMC.
On the other hand, watching Breaking Bad on Netflix was way better than watching Breaking Bad on AMC. No commercials, and you could watch as many episodes as you wanted, whenever you wanted. Netflix gave Breaking Bad the breathing room that it didn't get on AMC for people to become enamored of it. This is John Friedland, who was chief communications officer at Netflix at the time.
Netflix tended to be a godsend for complicated dramas that were serialized, meaning that they didn't have standalone stories. Like, the kind of television that does well in reruns for drama is things like Special Victims, you know, all the Law & Order shows, because it's got a story arc in that one episode. Breaking Bad, Mad Men, these were deeply complex, serialized shows. If you don't know...
Who I am may be your best course. Would be to tread lightly.
Ted Sarandos is chief content officer at Netflix. He's the guy who had to make all the deals with the networks and studios. Turns out it's this incredibly beautifully serialized show that will, you know, hook you in. And if you heck can, you'll watch one episode and all of a sudden it's three o'clock in the morning. You have to go to work the next day and you can't turn it off, which is so fitting to our delivery model. Most of the culture believed it to be a Netflix show, even though it aired on, made by Sony and aired on AMC originally. And this wasn't just a breaking bad story. Netflix found new audiences for all kinds of shows.
Sometimes, like with Friends or The Office, they were already off the air and then found new life. But for shows that were still on TV, like Shameless, which was on Showtime, Netflix could make it a hit. Bullying is a vital part of every ecosystem. It teaches kids resilience. When we put Shameless on Netflix in season seven, so it had been on the air for years, I saw William Macy after we came on Netflix for the first time say,
He said, you know, I've been able to live my life pretty normally up until now. As soon as the show came on Netflix, I can't go to the airport anymore. For a while, the Netflix effect was a virtuous cycle between Netflix and big media. Netflix gave the studios and networks easy money. Netflix got more stuff to stream. Subscribers got to see more shows. People started to watch the new episodes on TV, making more money for the TV networks. And for consumers, this was all upside. Netflix became the place to watch great TV shows without the irritations of regular TV.
But over time, this really wasn't a win-win-win. It was good for Netflix and good for Netflix users. But for the networks, this was a problem, though they were slow to realize it. Netflix was training viewers to watch TV on Netflix instead of on TV.
This is Gina Keating again. So the power of Netflix became pretty obvious to me, and I knew at some point that the studios would figure it out and they would not want any of their content on Netflix because their content was making Netflix gigantic. Netflix knew it too. Eventually, the company wouldn't be able to rely on the great stuff the TV folks had made. It was going to have to start making its own.
The underlying was, before we basically pursued House of Cards, was that if we're right and that this is the way that content is going to be delivered, then at some point,
NBC would become NBC.com and they would not want to sell us their programming anymore. And if that was coming, we better try to get good at doing it ourselves. Again, this is Ted Sarandos, Netflix's head of content. You knew this in 2013 or in the run up to it. You saw that. That was the direct conversation I had with Reed and my team, which was, if that's coming, I kind of thought you couldn't believe one without believing the other. Then we should at least have a toe in the water trying to figure it out.
And Netflix didn't want to just figure out how to make any kind of TV. It wanted to make the best TV, the TV you paid extra to see, just like HBO. In a GQ article in 2013, Sarandos famously announced that Netflix wanted to compete against the most prestigious programmer in America. The goal, he said, is to become HBO faster than HBO can become us. We worshipped HBO, you know, incredible company, incredible content. This is Sarandos' boss, CEO Reed Hastings.
And they wouldn't syndicate their stuff like The Wire or things from a long time ago on Netflix because they knew we were very similar and that we were going to grow into that space. So from that, we knew we had to get into original content. Earlier this season, we told you the story behind House of Cards, Netflix's first big bet on its own shows. It was hard for Netflix to get that show, but pretty easy to understand why it wanted to.
For starters, House of Cards had a brand name pedigree, and Netflix already knew that its audience loved an earlier British version of the show. It thought House of Cards would signal that it was serious about TV, that is, making a show good enough for HBO.
Way back in, you know, 2011, think about what content made for the internet was. This is Cindy Holland. She runs original programming at Netflix. It was user-generated almost entirely, maybe some funny or die skits. And so we were very conscious of the fact that whatever we put out first needed to say something. Tonight, I give you the truth. And the truth is this.
The American dream has failed you. And even up until February 1st, 2013, when we launched season one of House of Cards, people were asking, why is David Fincher making webisodes? I don't understand.
What's he doing? You know? And that's why it was important to have a title that was sort of prestige HBO level. Netflix's other original shows were all over the place, but they were all an attempt at making prestige TV. There was Hemlock Grove, a sexy horror series back when sexy horror stories were a big deal. You gonna find me a vampire to have a sexless three-way with? Gross.
And there was a resurrection of Arrested Development, a Fox comedy that developed a cult following after it got canceled. "Well, we don't have the money, Pop." "There's always money in the banana stand." Both of those might have seemed like likely hits too, though you don't hear much about them today. What we do still hear about from that first push into originals was one that surprised everyone, both in and outside of Netflix. "Look at you, blondie. What'd you do?" "Aren't you not supposed to ask that question?"
I read that you're not supposed to ask that. Well, you studied for prison? Oranges of the New Black is a funny, moving, and sometimes shocking show about relationships inside a women's prison. I loved it. It felt pivotal and disruptive. All of a sudden, you were seeing these lavish and thorough storylines for women, and particularly for women of color. It started as the story of a white lady who went to prison, an upper-class white lady, played by Taylor Schilling. Again, this is Vox's Emily Vanderwerf. And then she met a bunch of interesting people there.
And the show gradually sort of became about the other people more than it became about the original main character. Listen, Doc, I need my dosage. I'm finally who I'm supposed to be. It had one of the first really significant and well-portrayed trans characters in TV history in Laverne Cox's character Sophia. Everyone will be reading about it and everyone will be talking about it, including the ladies that have you.
It really was a way that Netflix distinguished itself because these were the sorts of people that TV wasn't telling stories about. And that's why it became a phenomenon. You hadn't heard these stories on TV before. TV had been getting incrementally more diverse here and there for a long time. Traditional networks had shows starring Black and Brown and queer characters, but there was still a huge need for more content that featured nuanced characters from these groups. Perhaps Netflix had data that showed that there was demand for diverse content, but Netflix didn't know that Orange is the New Black would be such a sensation.
I talked to people in Netflix at the time. The show they were just astounded was as popular as it was. Like that that show blew up was a little confounding to them. They had no idea what they had in that show. Cindy Holland certainly didn't think she had a breakout hit. There hadn't been anything like that on television. And, you know, a big diverse cast of people of different ages and ethnicities and identities.
One of the things we've learned at Netflix is most of those conventional wisdoms are just built up and reinforced over time because something didn't work at some point. And, you know, I believed in the show and I loved the show, but I wouldn't have believed you if you told me that it was going to be one of the most successful things we've ever done.
Critics and Emmy voters loved Orange is the New Black, but it was also just really popular. During its seventh and final season last year, Netflix noted that 105 million people had seen the show over its run. That's more than half its current subscriber base.
But the show meant more to Netflix than just numbers and awards. It was a go-ahead to make more shows that didn't look like shows that were already on TV. Netflix, by virtue of having to find the audience where it was instead of trying to appeal to the HBO audience, very quickly figured out, oh, if we program more diverse content, we will get a more diverse audience. That ended up being sort of the argument for chasing more diverse programming. Dear white people.
I get that being reduced to a race-based generalization is a new and devastating experience for some of you. Take Dear White People, for example. It's a Netflix show based on Justin Simien's Sundance movie about the experiences of Black students at a predominantly white Ivy League school.
Or Master of None, the dramedy starring Aziz Ansari, an Indian-American stand-up comic. I'll admit, I was a little worried. Some of my friends have racist grandmas. Oh, I see. You assumed I was a racist just because I'm old. Well, now the tables have turned. I'm sorry. The show generated a ton of praise, in part because of the way it talked about the experiences of American immigrants and their children. Thank you for embracing a little Indian boy from South Carolina and a little queer black girl from the south side of Chicago.
And Lena Waithe, an actor and writer on the show, won an Emmy for comedy writing, making her the first Black woman to do so. Netflix can justifiably take pride in giving people that typically weren't on TV or making TV shows a chance to do that.
But this does not mean that Netflix is necessarily a champion of diversity. It just wants to make stuff that a lot of audiences will like. And it's big enough that it could serve many audiences at once. So yeah, it's going to make Mudbound, a critically praised movie about race relations after World War II, but it's also going to make a lot of Adam Sandler movies. So while Netflix started out trying to be HBO, it's ended up becoming so much more ambitious. Now it wants to be all of TV.
Up next, what happened when Netflix decided it needed to make everything? Support for Land of the Giants comes from Quince. The summer is not quite over yet, but shifting your wardrobe to the colder months could start now, little by little. You can update your closet without breaking the bank with Quince. They offer a variety of timeless, high-quality items. Quince has cashmere sweaters from $50, pants for every occasion, and washable silk tops.
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On September 28th, the Global Citizen Festival will gather thousands of people who took action to end extreme poverty. Watch Post Malone, Doja Cat, Lisa, Jelly Roll, and Raul Alejandro as they take the stage with world leaders and activists to defeat poverty, defend the planet, and demand equity. Download the Global Citizen app to watch live. Learn more at globalcitizen.org.com.
Netflix started out making a handful of its own shows and was doing its best HBO impression. But over time, it became a content factory and made a lot of stuff. So it needed stuff that was easy to find and easy to make. You know, I was in Santa Fe the other night and a mother f***er threw a banana peel at me. Like comedy. And then not only did he throw a banana peel at me, but it was premeditated. You can tell.
Netflix saw that people after watching, you know, like binging a full series really liked to watch a stand-up special. There's something about, oh, they want something quick. So they're like, oh, we can just put this little stand-up special on something funny. Jesse David Fox writes about comedy for Vulture and he hosts Good One, a podcast about stand-up. He says Netflix saw comedy as a way to build up its library of shows. And in doing so, it changed the comedy business. You're just seeing so many comedians doing theaters. You know, before 2009, Vulture,
I think it's about three comedians total sold out Madison Square Garden since 2009. I think 11 or 12 have. I mean, the amount of comedians that are big is like never seen before. It's the same meals, holidays, and movies anyway. What's the difference who I'm with? Netflix has been great for the really big name comics. People talk about going out. We should go out. Let's go out. We never go out. Well, this is it.
The Chris Rocks and Dave Chappelle's and Jerry Seinfeld's, well, actually now, Netflix money is actually the easiest way for them to get that big payday. Really, really big paydays. Netflix spent a reported $100 million for Jerry Seinfeld and $60 million for Dave Chappelle. But most Netflix comedy specials don't star Dave Chappelle. They feature comics you probably haven't heard of before, and those comics get paid much less.
What they get in return is exposure to Netflix's massive audience, which ends up increasing the comics audience. Think of it like another version of the Breaking Bad story. Instead of discovering shows that have been around for a while, Netflix subscribers discover performers.
Lisa Nishimura runs Netflix's documentary and indie films department. But before that, she oversaw its leap into comedy. People go to shows and the comics would be like, where did all these people come from? Because they are watching, they're calibrating their audience sizes. And it would go from 30 people to 50 people to 100 people and those incrementally. And they're like, well, why do you guys even know about me? They're like, oh, your new Netflix special. They're like, I haven't shot a new special in four years. We just licensed the special and it just...
for an expansion. Netflix started out buying comedy specials that had already aired somewhere else. And then it began to partner with comedians on new specials. And in the process, sometimes it turned them into overnight celebrities. I don't know if you guys can tell, but I am seven and a half months pregnant. Yeah. It's
Very rare and unusual to see a female comic perform pregnant. Ali Wong had been working at stand-up for years, but she couldn't break through. Her Netflix special, Baby Cobra, changed all that. It's so sexist when people ask me, well, if you're here, then who's taking care of the baby? Do you think is taking care of the baby? The TV is taking care of the baby.
You know, Ali self-funded and shot that very first special and shopped it for a long time. And it was just interesting to talk about tropes like, oh, Asian people aren't funny. You know, I'm like, no, really, we can be funny. I promise you. You know, the idea that she was pregnant, like who wants to hear that story? I'm like, at least half the population of the world wants to hear the story. The Ali Wong example is the most extreme because she was going from not being able to probably sell out a weekend of clubs to
the weekend before the special came out to she could sell large theaters by a month later. I bet if she wanted to, she probably could have sold out Madison Square Garden.
Netflix didn't invent the idea of putting a comedian on TV and making them popular. Johnny Carson could famously make someone's career in an evening by giving him a spot on his old show. HBO and Comedy Central did comedy specials for years. But Netflix supersized the phenomenon. It gave so many comedians a shot and let so many people watch those comedians that it increased the chances of finding and making an Ali Wong. When I was in my 20s, I ate Plan B like Skittles.
So my uterus probably looked like a smoker's lung. You know, if Ali put that out, that special on another network, I think it would have built a lot of buzz, but it would not have exploded. But that explosion is because Netflix was able to supercharge it.
Ali Wong's ascent into stardom is a fun story. It shows how Netflix can use its enormous platform to shine a spotlight on someone who wasn't breaking through anywhere else. But Netflix can also use its enormous platform to make something pop just because it wants to. Here's an example. Think back to the end of 2018. We're all home for the holidays. Maybe we got a little tired of our families. All the Christmas specials on TV are exhausting. But then Netflix dropped something new. But you never...
ever take off your blindfold. If you look, you will die. Do you understand?" Bird Box was a mediocre post-apocalyptic movie starring Sandra Bullock. Definitely not something you'd rewatch. "Humanity has been judged and we've been found wanton. You got world religion and mythology that's full of mentions of demons or spirit creatures." But that didn't matter because nearly 50 million people watched it in the first week and about 80 million in the first month.
So what do we make of a bad movie that lots of people watched? That certainly has happened before Netflix. But usually that's when Hollywood spent a ton of money telling you to watch it or because it was a sequel to a hit movie or based on a comic book. But Bird Box, no one had ever heard of it before they saw it on their Netflix home screen. One day, it was just there. And Netflix told people to watch it, and they did.
Some context here. Netflix makes an astonishing amount of stuff. Variety calculates that last year Netflix made more than 370 TV shows and movies. That's more than the entire TV industry combined made in 2005. And it spends billions of dollars on that slate, which goes out to nearly 200 million people around the world. But like anyone else who makes TV shows and movies, Netflix will have duds. Humiliate me in front of the court again. I will kill you.
Bonnie, do you remember Marco Polo? It was a big adventure series. Nope. How about The Get Down? It's a musical about kids inventing hip-hop in the Bronx. Oh boy, no. Netflix doesn't seem to get dinged for those flops, either by Wall Street or by its audience. And, and this drives the rest of the TV business nuts, we don't really know how most of Netflix's shows actually do. There's no consistent independent source of audience data for that programming the way Nielsen does for almost all TV shows.
And the only time Netflix does put out numbers is when it wants to brag about something, like Bird Box. And the success of Bird Box and the originals Netflix has been pushing since then is a testament to one thing more than anything else. Massive scale. And by the way, they're taking advantage of that in the most brilliant way. Jason Blum makes movies and TV shows for Netflix and everyone else. He's the guy who brought you Get Out and The Purge. If you ask him about the future of entertainment, he's pretty sure who the winner will be. They've outmaneuvered
everyone in Hollywood for 15 years. And my guess is they'll keep outmaneuvering everyone. When Netflix first started making its own shows, there was a lot of discussion about the idea that Netflix, the tech company, was going to use data science and algorithms to figure out exactly what people wanted and make it for them, even if they didn't know they wanted it. And to be clear, Netflix never went out and actually said this. In fact, it insisted it wasn't going to tell producers and writers how to make a show.
It seems like the truth is somewhere in the middle. Creators we talk to say Netflix definitely offers notes, but it never tells someone to add a scene or drop a character because the data says so. The computer isn't writing the script.
Netflix can take credit, though, for all sorts of innovative stuff that really has changed the way we interact with TV. It got rid of ads. It more or less invented binge watching by bringing you an entire season in a single day. And it's playing with new ideas all the time, like experiments with interactive shows that let viewers choose their own adventure. But in the end, a lot of the TV that Netflix is showing us in 2020 doesn't look that different than TV you could see years ago. There's just a lot more of it. Oh!
Obviously what changed is that like they have so much money and they have made so much more TV than anyone could ever have imagined anyone making. This is Willa Paskin. She writes about TV for Slate. Netflix is really one of the things they've been most successful at is like building up the myth of Netflix. So when Netflix started and this continues now, we're like, ooh, are they going to revolutionize television by like knowing exactly what you want? The algorithm is going to change everything. And you're just like,
So, yeah, Netflix movies and TV shows look, for the most part, like other movies and TV shows. I don't think there's anything inherently wrong with that.
And at this volume, Netflix is going to make a lot of flops or mediocre stuff. But it still produces a lot of ambitious, really interesting stuff like Roma, like the documentary American Factory. Those both won Oscars, by the way. And if you don't want to watch that stuff, that's fine. There's trashy reality shows. There's movies starring David Spade. You can pick one. You can pick all of them. And all this is kind of extraordinary when you think about where Netflix started.
First, they were mailing DVDs to try to beat Blockbuster, and then they wanted to beat HBO. And now they want to be all of TV. Right. And now look what's happened to HBO. Its new owner, AT&T, has decided that just being HBO isn't enough anymore, not in a Netflix world. So AT&T has launched HBO Max. We've got all your favorites. HBO Max, where HBO meets so much more.
Which is basically HBO plus a lot of TV shows and movies you've seen before. Sounds like HBO just wants to be Netflix. Yep, we have come full circle. All right, so we just looked at how Netflix has changed what we see on TV. Next week, we're going to look at how those changes have shaken up the entertainment industry and how the people who work behind the scenes in Hollywood feel about it. Oh, God, there are so many billboards. Oh, God.
Netflix has really edged its way into being like a constant presence in LA. One of those things that we just kind of put up with.
And one more thing, Peter. So I'm going to leave to go have a baby. What? Which you might have noticed. Yes, I have. It could happen at any moment now, but I'm leaving this podcast in good hands. Ronnie, we will take care of it for you. Good luck. Thanks. Take it away, Peter. This podcast is a production of Recode by Vox and the Vox Media Podcast Network. This episode was produced by Bridget Armstrong and Zach Mack. Our editor is Charlie Herman. Gautam Shrikashan engineered and scored this episode. Zach Mack is our showrunner and Nishat Kerwa is the executive producer.
Quick disclosure, Vox.com and Vox Media make shows for Netflix. None of the people working on this season of Land of the Giants are involved in the production of those shows. I'm Ronnie Mola. And I'm Peter Kafka. Thanks for listening.
