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Netflix Overpays Again in 9-Figure Deal for Stranger Things’ Bros

Last Updated September 23, 2020 1:04 PM
Lawrence Meyers
Last Updated September 23, 2020 1:04 PM

Nobody would ever mistake Netflix for Scrooge McDuck. The fictional cartoon relative of Donald Duck was known for being both rich and stingy. Netflix certainly does not appear to have been imbued with his DNA.

Case in point: The Hollywood Reporter announced  that Netflix has thrown a nine-figure deal at the Duffer Brothers, creators of the hit series “Stranger Things”.

Studios Throw Money Around

It’s not uncommon for Hollywood studios to throw large sums of money at successful showrunners. In fact, in recent years mega – deals have become almost the norm.

Studios value successful showrunners because it’s difficult enough to get a hit on any television channel. The success of a given television show is often attributed to the showrunner, and a studio would rather hold onto that talent than risk letting it slip away to a competitor.

Consequently, tens of millions of dollars tend to get thrown at this talent.

We have seen a handful of nine-figure deals at major studios. Steve Levitan’s deal for $125 million is with 20th Century Fox TV, Greg Berlanti’s was worth $400 million at Warner Bros., Ryan Murphy picked up $300 million from Netflix, and the streamer also ponied up $100 million for Shonda Rhimes.

All of these individuals had an incredible track record of success. Dan Fogelman , creator of NBC’s “This Is Us”, also reportedly picked up a nine-figure deal based simply on one television show.

A Lot Of Money For Limited Success

So it’s no surprise that the Duffer Brothers should pick up a mega-deal. What’s surprising is that Netflix would shell out this much money for showrunners who thus far have only demonstrated their ability to produce one television show.

Their only other credits were writing and directing the little-seen 2015 feature film “Hidden”, and writing episodes of “Wayward Pines”. Clearly the guys have talent, but is Netflix overpaying?

This is a big risk for Netflix. Yet it seems that Netflix is going for broke, literally, and offering up massive paychecks in order to entice talent.

Stranger Things, Netflix
Netflix breaks the bank again for Stranger Things. | Source: YouTube/Netflix

Netflix had already made several eight-figure deals with a number of comedians percent up specials. The aforementioned deals with Ryan Murphy and Shonda Rimes set a precedent for the Duffer Brothers.

20 years ago, the Duffer Brothers would’ve certainly generated enough heat around their hit show to score a seven-figure development deal at one of the major networks.

Yet Netflix is so desperate to make waves as competition in the streaming world heats up, that the company obviously feels it can spare no expense to remain competitive.

While Netflix claims that Stranger Things generated tens of millions of viewers, there does not appear to be any obvious way to calculate how that translates into revenue, either from a retention standpoint or as a matter of new subscribers.

The Duffer Brothers will have a hard time running more than two shows at a time, so there seems to be some question as to what the return on this investment will really be for Netflix.

How Much Is Too Much?

Ed Butowsky, Managing Partner of Chapwood Capital Investment Management, tells CCN.com: “Hollywood is taking the opposite approach to paying for programming than it should. With an increasingly fragmented market, studios should be shelling out less money for talent as opposed to more. Because audiences are so fragmented, subscriptions and/or advertising are not likely to generate enough cash flow to offset the cost of these mega – deals.”

There are countless talented showrunners working in Hollywood, and they are deserving of whatever remuneration their agents can negotiate for them. Even comedians.

Yet, studios should reserve their biggest deals for truly visionary showrunners. It’s one thing to have a single show that is a cult hit. It’s another to have demonstrated success over many television shows, or to be extraordinarily inventive such as “Game of Thrones”.

Netflix is just spending money in a desperate attempt to remain relevant.