How does Netflix decide whether to renew or cancel a show?

netflix logos cancellations renewals

Pile of 3D Netflix logos – Image: Adobe Stock

Netflix cancellations are plentiful and while there are statistics suggesting that Netflix’s cancellation rate is similar to other streamers and networks, at least there is a perception that Netflix does it more than most. What’s behind the decision to renew or cancel a Netflix show? We’ll see.

Earlier this year, we published an article about whether Netflix really cancels everything and found that in general, Netflix renews more than it cancels.

Regardless, cancellations can often confuse show fans as to why one show was renewed and another was cancelled. Is it as simple as more people seeing one and less the other?

The answer is certainly yes to that question, but there is much more to it than is ultimately implied.

Netflix has internal ratings for all programming

Naturally, Netflix has a ton of data at their disposal, allowing them to quickly determine if a show made back what it cost to make, and certainly to see ahead of time if a show will hit certain targets.

Traditionally, knowing what something does is pretty easy. If it’s a movie, you have the box office; if it’s a TV show, it has advertising revenue and viewing figures. But in the world of streaming, things are a little harder to nail down when one customer subscribes to everything.

The closest we’ve come to learning about internal decision-making and the metrics Netflix uses internally was through an exclusive Bloomberg report by Lucas Shaw during the Dave Chappelle controversy in late 2021.

The full article is worth reading, but let’s break down the key points.

Dave Chappelle Closest

The Closer by Dave Chappelle – Picture: Netflix

They summarized the special based on “financial return,” which is an internal way of determining how much something made for Netflix versus how much it cost.

According to Shaw, Netflix “relies on its own idiosyncratic data points to rate shows.” He says the primary measure of a title’s impact is in an “adjusted viewing share,” “efficiency score,” and “impact value.”

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There’s a lot of secrecy about what that score goes into, though, but here are three examples from Bloomberg:

  • dave chappelle special “had a shock value of $19.4 million and an efficiency score of 0.8X” and an adjusted viewer share of 12.
  • Inside Bo Burnham it has an efficiency score of 2.8x and an adjusted view share of 10.
  • squid game it had an adjusted view share of 353 and an efficiency score of 41.7X. It had nearly $900 million in “shock value” compared to the $21.4 million it cost to produce.
squid game netflix

Squid Game – Picture: Netflix

Again, what exactly drives that is not fully understood. The article states that even things like if a subscriber is new to the service can increase the number or if a subscriber doesn’t watch much.

Either way, the higher the efficiency score, impact value, and adjusted viewing percentage, the higher the chances of renewal.

What data drives renewals/cancellations that we can track

Unlike in years past, there is now a lot of data being made public by Netflix or available through third parties that can help us guess renewals and cancellations.

Completions on Netflix matter for renewal

Completion data is another big thing when it comes to cancellations. After all, First murder The showrunner cited that as one of the main reasons the show didn’t get a second season (besides marketing).

Digital I, a UK SVOD data analytics company, provided What’s on Netflix with some data and insights they’ve seen regarding completion statistics.

first death i digital termination data

Completion statistics for First Kill on Netflix

For First murder, the show had less than 45% of the people who started episode 1 to finish episode 8. That compares to a show like heartstopperwhich had a completion rate of about 75%.

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A representative from Digital I told us that “Historically, less than 50% almost always leads to cancellation,” adding the top recent shows in terms of high completion rates included. Strange things, Lincoln LawyerY welcome to eden. All three shows were renewed for future seasons.

Netflix hourly data can often suggest renewal/cancellation

Netflix’s top 10 have evolved over the last two years since they were added and the latest version of the tool has pushed weekly hourly data through the Netflix top 10 site. Each week, they reveal the top 10 titles in four categories (English and Non-English Movies and English and Non-English Shows). For those 40 shows and movies, they give us a number of how many million hours were watched.

That data has given us insight into how a show goes up and down, and from what we’ve seen, weeks 2 and 3 are typically the most important to a show’s survival.

cowboy bebop netflix canceled

Cowboy Bebop got an unusually quick cancellation

Big drops of around 60% or more in week 3 often mean shows are unlikely to return. cowboy bebop suffered a 59% drop from weeks 2 to 3 and First murder had a 62% drop in week 3.

These big drops are no doubt related to the completion data we quoted above.

As a quick snap, you can browse through the top 10 hourly data with charts and percentage drops via our search tool.

External factors that can drive renewals

There’s no doubt that there are external factors that can help a show get renewed, and Netflix has even cited trackers like Google Trends in the past when talking about the success of its shows.

Websites like Google Trends, IMDb, and even social media can give you an idea of ​​how popular a show is. There’s even a huge industry of companies that track “demand” and other factors like Nielsen, Parrot Analytics, and Whip Media to name a few.

We hope it sheds some light on what it takes to renew or cancel a show on Netflix.

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