John Landgraf Opens Up About What Led to — and Ultimately Killed — Peak TV

Lesley Goldberg
·11 min read
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FX CEO John Landgraf, fresh off revealing a 14 percent decline in the volume of scripted originals and saying “adios” to Peak TV, can pinpoint the moment the bubble burst.

In an interview with The Hollywood Reporter, the always insightful 20-year FX executive also maps out a vision of the future as he does his best to forecast what will stop the TV industry’s contraction that prompted the number of U.S.-produced scripted series to decline more in the past year than the decade prior.

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You mentioned at TCA that the contraction started well before last year’s dual strikes. What do you think the turning point was?

Landgraf: The inflection point was when Netflix decided to change their public-facing Wall Street metric from global subscribers and ARPU [average revenue per user] to profit. I think they did that because they were ahead of everyone else and it was to their advantage to choose a metric in which they had the lead. And it not only benefited them, but all the other companies that were further behind were put into a significant amount of duress. And they had more than a decade of leeway basically to spend at a loss in order to cross the moat and be able to build scale before they achieve profitability. And unfortunately, the other companies have not been afforded that opportunity. So trying to get to profitability faster, you can definitely do things well. Netflix is very good at what they do; they’re very good at technology and customer acquisition and programming and many things. And you can definitely try to get there. But remember, it took them a long time to scale up and they were a first mover. There are a lot of things you cannot do very quickly. The only thing that you can do to get closer to profitability faster is reduce your output. It’s cut costs. Everyone has had to do that, by the way.

There is a learning curve that you go through when you enter a new distribution mode. And these companies that had perfected — or come as close to perfecting — the theatrical distribution model, syndication sales or affiliate sales or channel programming as you possibly could have had a lot to learn in terms of how to program a streaming platform and what works. I’ve had a lot to learn, and I think as you learn, you get better at it, you get more efficient. So I think there was a certain amount of inefficiency that was just about a whole bunch of companies entering a space where they had no prior experience. And you can’t blame anybody but inexperience for that.

Right, you throw a lot of programming at the wall to see what sticks and from that, hopefully a strategy emerges. What do you think it will take to stop the contraction?  

Landgraf: A stabilization of the number of successful streamers at a profitable level, all of whom are in an ecosystem and competing with each other. What made Hollywood stable was that there were a number of very long-term, very successful companies, and they fought like cats and dogs with each other, but they also acknowledged each other’s existence and they were capable of selling to each other. The original Shogun was a CBS production for NBC as a broadcast network. I think it’s harder to sell to other companies when there isn’t any kind of stasis and there’s no knowledge that all these participants in the ecosystem will continue to exist. There are more streaming services than the market can bear. Now, I have no idea how they become less; I don’t know if it’s a commercial bundling arrangement. It’s just happened with the sports joint venture that Disney, Fox and Warners just announced.

Whether anything like that is possible or whether it has to do with mergers or consolidation or companies being broken up, there are just not going to be seven or eight or nine or 10 or 12 or 15 profitable streaming services. There are going to be four or five or six or three, I don’t know. And ultimately, once we have arrived at that state, then each of those will have some knowledge of their business and will achieve some sort of stasis. And then those entities will still try to compete with each other and try to gain advantage and gain market share. But I have no idea how long it’ll take to get there and even what the final state will be. But that’s what it’s going to take. We’re a long way away. I have no idea what the pace of decline will be or what the floor will be.

You also noted that you didn’t think it was fair to crown Netflix the winner of the streaming wars, but over the past few months, HBO has licensed some of its crown jewels — Sex and the City and Six Feet Under — to them. Could you ever anticipate Disney licensing any of their content back to Netflix? Or any FX fare?

Landgraf: Not the crown jewels. I could imagine some stuff going back there, but I don’t think the most important content. Don’t count Disney out. Disney’s a formidable company, which has only been in this [streaming] business for less than five years and has achieved mighty things and has an incredible constellation of assets and very, very talented people and is still learning and is still growing. So it’s too early, I think, to call the game. I do think that not everyone can succeed, though. And if you ask me who will definitely succeed, the answer is Netflix and then closely followed by Disney. A company like an Amazon or an Apple that’s worth $3 trillion, it’s a matter of their choice whether they want to be in this business or not. They can be in whatever business they want. Where does a $3 trillion gorilla sit? Wherever it wants. I wouldn’t count the other companies out. Disney already has a certain magnitude and scale in streaming that makes it a formidable competitor to Netflix, certainly in America. And other companies are working to get there. I think others will succeed. I just don’t know who, how or what shape.

Netflix released a ton of viewership data last year, using time spent as a metric. Based on what you’ve learned about being in the streaming business, what metric do you think we should be looking at? Is it minutes watched? Completion rate?

Landgraf: It’s more than one. I think engagement, which is hours of consumption and how many people are on the platform each day and how many hours they spend on the platform, directly translates customer satisfaction into pricing power and other things that are important to a streaming service. So, there’s nothing wrong with Netflix saying this is important. In looking at that carefully, I think the most intuitive number to humans is average audience. When you read that a 100 million people watch the Super Bowl, it tells you 100 million people watch the Super Bowl. I’m not a big fan of billions of minutes. It is a valid business metric in terms of engagement on a platform, and engagement is very important. But I personally think that in terms of actual humans watching actual stories, how many people watched — not one minute of it, not five minutes of it — but watched [all of] it is the most intuitive metric. And I hope that’s one of the metrics we look at carefully.

Would you like to see Disney release those metrics for its streaming fare? 

Landgraf: Publicly? It’s not my call. I would like to see the industry return as soon as possible to an average audience metric. We could spend a couple of hours talking about why that might not be to everyone’s advantage and why it’s maybe not likely to happen soon. I also wish genuinely and fervently for peace on earth, and I don’t think it’s coming anytime soon.

What metrics should we be looking at to determine the bar of success for a streaming service?

Landgraf: I don’t get to decide what metric we should be looking at. Wall Street gets to decide what metric we should be looking at, and that’s the metric that they’re looking at, and therefore we’re going to succeed on that metric at the Walt Disney Co. But nobody can change the mind of people about how they evaluate where they should put their money.

This year marks your 20th with FX. Looking at the next 20 years of this industry, can you make a prediction about where we’re going to be? Or one subject we should be talking about more now?

Landgraf: I can’t, because the things that really shock you are the things that you can never imagine. I genuinely would’ve thought that the ability to write was the exclusive purview of humans. Now, of course, writing with comprehension and writing with some kind of technical proficiency are two different things, but I could not have imagined that AI could do what it now can do. I have no idea what it might be able to do next year or the year beyond that. It worries me to automate some things that are so robustly and profoundly at the center of what it is to be human, not just because of what might happen, but because I think it’s important that human beings learn to read and write. I think that’s fundamentally important to civilization. And I think when you automate something, you have a tendency to see it atrophy.

Having spent the past few years learning more about streaming, what’s next for you? Do you eventually want to be able to run a streamer?

Landgraf: I’m pretty happy where I’m at. I’m 61 years old and a little burned out. These are hard jobs. To do them for 20 years is not easy. But I love my colleagues, not only the ones at FX, but my colleagues across the company at Disney. I’m enthusiastic about the leadership of the company I work for, from Dana Walden to Bob Iger to all the other people. No, I don’t want to do anything other than what I’m doing. I never have wanted to do anything other than that because ultimately what I want to do and what I’m willing to learn, to work really hard to compete and to change in order to work with writers and actors and artists and try to make good stories with them.

FX is about to launch Shogun, and one of the trends that we’ve heard since the strike is that the truly closed-ended limited series is falling out of vogue because it’s expensive to do for what’s effectively a one and done, and viewers want to have a library like Friends, The Office and, most recently, Suits. Given the glowing reviews Shogun is generating and the time and financial resources you’ve invested in it, could you see spending that amount of time and money, doing that again in this climate?

Landgraf: Yes. It depends on how successful it is and whether there’s an appetite for it. Ultimately, the audience gets to decide whether it’s something they want. I would hope if we were able do something like that it wouldn’t take 11 years. So no, I can’t imagine spending another 11 years working on something else, but working hard on something to get it right and make it big and detailed as well as really deep in terms of character and the human condition, as long as there’s appetite for that in the viewers, I think it’ll be possible at times to do that kind of work.

You mentioned that FX wanted Reservation Dogs to go five seasons before the creator decided to end it after three. Have you spoken with Chris Storer and Joanna Calo about how much life they’re planning for The Bear?

Landgraf: I sure have, but ultimately — as you saw with what happened with Res Dogs — this is a creator’s decision. It’s demanding and hard to make something as good and as deeply personal as Res Dogs or as good and as deeply personal as The Bear.

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