The Toucan in the Coal Mine?

[Usual caveat for this thread. A lot of this is well past the boundary of my expertise so if any of my better informed readers would care to chime in, the input would be greatly appreciated.]

The Netflix story is definitely post-modern. The narrators are unreliable. The facts are incomplete. The versions participants and observers tell themselves can't be entirely right but may not be all that wrong. 

Part of the problem is that the company is very good at controlling the narrative (spending billions annually on marketing and PR doesn't hurt). Case in point, the production deal just signed with Spielberg's production company. The lede from this CNN article could have (and possibly did) come out of NF's PR department: "Steven Spielberg is partnering with Netflix. Getting Hollywood's premiere director represents a major coup for the streaming service." You have to read the whole thing to learn that "Spielberg added that he and Amblin ... will continue to work with longtime partners like Universal Pictures." and that "Netflix and Amblin did not say how long long the multi-year deal would be nor if Spielberg would direct any films that would land on Netflix."

In other words, we have no idea how big (or trivial) this is. NF has a history of picking projects passed over by other studios, always offering top dollar. This could be a major deal or it could be Amblin burning off some second rate properties.

By comparison, this potentially much more interesting development pass unnoticed by Netflix business watchers.

Squeeze out that overdue tear. #TucaAndBertie premieres tonight at 11:30pm only on Adult Swim pic.twitter.com/OmRhcufpPj

— adult swim (@adultswim) June 11, 2021

A bit of context.

NF started out buying no rights other than licensing to any of their originals (House of Cards, Orange is the New Black, etc.). Despite this, major (mainly East Coast) publications including the New York Times ran credulous borderline puff pieces about the massive content library the disruptor was building. This went on for years until people finally started catching on.   

Coincidentally or not, when reporters started picking up on the apparent contradiction between this approach and NF's stated goal of long term dominance, the company reversed its policy and made a great show of buying all rights. The explanation for the change didn't make a lot of sense but no one seemed to care. NF's commitment to acquiring IP instantly became part of the standard narrative.

There are important caveats here. Netflix’s content costs are high in part because it now buys out all the rights (e.g. home video, syndication, EST) for its Originals on a global basis, while traditional networks (e.g. FX or ABC) will typically buy only select content rights and on a single market basis. Furthermore, buying out all rights means that the talent involved in a hit series (e.g. cast, writers, producers) don’t have access to any of the economic upside from participating in a hit series. As such, Netflix must also pay extra (and upfront) to compensate the talent responsible for their Originals for this lost income opportunity (albeit on a risk-adjusted basis). As a result, Netflix’s costs for a given volume of original content is substantially higher than that of linear and/or domestic networks with the same output. That said, this same dynamic means that while most of its traditional networks hedge their content investments, Netflix quadruples down.

But it clearly wasn't entirely true. Lots of originals were based on IP owned by major studios and other corporations and we could be reasonably certain that NF wasn't getting clear title to She-Ra or the DC universe Lucifer. This suggested that some of the service's most popular shows are not part of its permanent content library. Netflix would continue having to pay large sums of money to its competitors if it wanted to keep airing them. (Compare this to Amazon actually buying Lord of the Rings.)

Still, that left a lot of shows not owned by Disney and the rest. Presumably NF did have clear title to those. That would still leave a decent library. But if this is the case, how did Tuca and Bertie land on WB's Adult Swim? This was an obscure web comic from a largely unknown cartoonist. There was no obvious reason to bend the rules for this but they appear to have done so. Is this the only case, or is NF passing up rights on other originals. If so, their library even thinner than we thought.

I don't want to put too much weight on this one data point. Netflix is a major company that may well justify its valuation one day, but journalists have gotten in the habit of letting these press releases set the narrative for them and ignoring contradictory details. That's not good for the profession.