Netflix is notoriously difficult to navigate as a journalist. Most people who work either actively distrust the press or have been taught by the Netflix culture to not speak to the press. But I have some good sources there and while many times I learn things I can't use publicly, there have been times when someone has been willing to at least speak to me without attribution.
Several days ago, someone forwarded me some internal emails from Netflix. I'll be circumspect about some of the details, in order to keep anyone there from tracking down my source.
One of Netflix's long-cherished components of its corporate culture is the idea that team member should take "informed risks." And while that idea has scaled back a bit in recent years, it's not unheard of for someone to step out of their lane a bit and put forward an idea that potentially pushes the boundaries at the streamer.
These emails were a chain of message that began with a very thoughtful proposal from a relatively mid-level executive and it posited one question. The writer's strike is ongoing and an actor's strike might be on the horizon. So what would be the best way to settle this issue? And by "best way," the proposal would be built on maximizing the amount of impact Netflix could have on the negotiations while simultaneously inflicting financial pain on their streaming rivals. And it is a fascinating read.
The proposal included in the initial email suggests that Netflix should cut a separate deal from the other studios and negotiate terms with the unions that would minimize the changes the streamer would need to make.
* Netflix would propose to shift the production cycle for most shows in a way that would make it easier to keep writers tied to production. In part, that would involve ordering some shows based on a pilot script and outlines, allowing the writers to break the episodes during the production process. The minimum guaranteed size of the room would remain small (4 instead of the six proposed by the WGA), but those production changes, along with tweaks on span and other related items might provide enough for writers to accept without substantially impacting the bottom line.
* There wouldn't be much of a change in transparency on viewing numbers and other internal metrics used in determining content value. But there would be a formula that would provide performance-based bonuses for projects that reached certain goalposts, including Netflix Top Ten Lists, Nielsen rankings and some other third-party data. It's not residuals, but it would at least provide some financial incentives for performance that would be a solid interim step. And it's notably a similar approach to the one reportedly proposed by SAG-AFTRA, which would pay performance-based residuals out of an agreed-upon pool of funds.
* Changes to AVOD payments and residuals that would not only provide a pay increase for union members, but make it less lucrative for streamers to move low-performing projects to AVOD. The proposal notes that while it would be a substantial cost to Netflix, the changes would fall hardest on Prime Video and Warner Bros. Discovery, both of whom have been aggressively moving original productions from SVOD to AVOD. That factor was seen as a net plus.
* A penalty "payment" that would go to union members if a project was completed, but permanently shelved for whatever reason. This was another proposal that seemed to be most directly targeting Warner Bros. Discovery, although this would have some impact on nearly every streamer at some point.
There are some other ideas, but many of them are somewhat incremental shifts in payments. More than AMPTP would likely would prefer, but less the the final WGA proposals. The subject of AI wasn't addressed at all. I suspect because of the complexity of the issue in the framework of this idea.
The email went out to a handful of Netflix employees and most of them appear to be in the same work group. Although one of the recipients was a person the author reported to. There were a number of responses and the initial feedback seemed to center around a couple of points. a) There were a lot of solid, actionable ideas that would likely be accepted by the unions, and b) The proposal would essentially be declaring war on the other major streamers and the consensus was that wasn't a move Netflix's top executives would likely to approve. "(name redacted) hates our competitors but (name redacted) doesn't HATE hate them," was part of one response.
It's not clear if this is an idea that Netflix could have moved on even if it wanted to. None of the participants in the email chain were anywhere near the level where they understood the rules of engagement with AMPTP. But none of the responses believed company executives were willing to burn so many bridges with other major media companies. Especially at a time when Netflix is aggressively trying to license selected content from those same companies.
But the conversation did note that Netflix and the other streamers have a lot more flexibility to negotiate than the companies that are attempting to juggle streamers as well as legacy broadcast assets.
I spent a lot of time trying to confirm the authenticity of the emails and contacted everyone in the email chain. Several people admitted to having received the emails, but one person who seemed to have added several long entries in the email thread told me they "didn't recall" whether they had read it or responded to it in any way. Which seems...unlikely. I read a selection of emails to another recipient, who told me they appeared to match the ones they had received.
The author's superior doesn't appear to have responded, although I very likely didn't receive all of the responses that weren't part of the "reply all" chain. But enough people confirmed the legitimacy of the emails that I feel pretty confident they're real and unaltered.
As to the question of whether the idea was passed along up the chain at Netflix, my guess would be no. There was a lot of agreement that the proposals had value and with some further tweaking possibly allowed Netflix to settle with the unions early and net a massive advantage with its rivals. But there also seems to have been a quick consensus that this "informed risk" would be too risky for Netflix upper-level executives to seriously consider.
So in the end, this falls into the category of "what might have been."
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