[Insert Showtime Bee Pun Here]

Happy Netflix Earnings Day! Later this afternoon, the streaming behemoth will reveal how much money it made during the final three months of 2021, and just as importantly, how many subscribers it added as the year came to a close. I will not hazard a guess as to whether Netflix will meet industry expectations, but I will post some quick analysis on Vulture after the numbers come out. As for this week’s newsletter, our lead story looks at how the breakout success of Yellowjackets could not have come at a better time for the folks who run Showtime. And as a little appetizer before the aforementioned Netflix report card, we’ve also got some thoughts on why nobody seemed to freak out when the streamer hiked its price (again) last week. As always, thanks for reading. —Joe Adalian

Reach Joe on Twitter @tvmojoe or email buffering@vulture.com.

The out-of-the box success of Yellowjackets — great reviews, strong ratings, phenomenal, er, buzz — is the sort of unqualified triumph Hollywood execs dream about as the Ambien kicks in and they drift off for their nightly 4.5 hours of slumber. But beyond exuberant joy, the suits at Showtime who greenlit the series are also likely feeling another emotion right now: relief.

While it would be a mistake to say Showtime was in any sort of deep trouble before Yellowjackets took flight, it is not an exaggeration to note the network had been struggling to stand out in the TV universe recently. The woes started a few years ago, when ViacomCBS decided the focus of its efforts to compete with Netflix would not be Showtime but an entirely new brand, Paramount+. The company began investing billions into P+, directing the company’s many brands (CBS, MTV, Nickelodeon, Paramount Pictures) to bring their best IP to the platform formerly known as CBS All Access. It was exactly the opposite of the model established by rival WarnerMedia, which used its legacy pay-cable brand — HBO — as the centerpiece of its streaming evolution. Not helping matters: Over the course of 18 months, Showtime said good-bye to a trio of longtime tentpoles — Ray Donovan, Homeland, and Shameless — even as new hits to replace them were slow to arrive. There was a nagging sense that Showtime was in danger of becoming an afterthought in the streaming wars, seemingly even within its own parent company.

Launching a hit as big as Yellowjackets does not suddenly eliminate all the doubts about Showtime’s future. But it has demonstrated Showtime still has value for ViacomCBS, particularly when combined with the strong performance earlier in 2021 of the Bryan Cranston drama Your Honor, as well as the monster ratings for the limited-series revival of Dexter late last year. Showtime is also home to arguably the coolest late-night franchise in television, Desus & Mero, as well as political docuseries The Circus, considered something of a must-watch inside the Beltway. Given the relatively meager size of Showtime’s content budget vs. its peers, the service has quietly been overdelivering.

But successes such as Yellowjackets and Your Honor also once again raise questions of why ViacomCBS continues to insist on putting so many resources into its lower-cost, ad-supported streamer (P+) rather than investing more in the costlier, premium play (Showtime) — or why it doesn’t just combine the two into one super service. As investor and industry analyst Matthew Ball told me last fall, Showtime and P+ “obviously need to be collapsed” if ViacomCBS truly wants to be competitive.

To be clear, the folks at Showtime insist they don’t at all feel like a neglected stepchild. Gary Levine, who serves as co-president of entertainment at the network (alongside Jana Winograde), told me last week that his corporate bosses had been nothing less than fully supportive, and chuckled when I suggested his bosses had put Showtime on an island to fend for itself. “We love Showtime island,” he said. “We’re very secure, and we know we are a very valuable piece of our corporate parent. And they love what we have brought to the table to them this year and what’s on the drawing boards going forward, both in terms of Showtime’s performance here and our shows feeding their international pipeline. So we’re very happy with our place in the ecosystem, both of ViacomCBS and the entertainment industry in general.”

Levine’s mention of Showtime’s international value was not accidental. While Showtime and P+ are totally separate services in the U.S., content from the two platforms is combined into one service in much of the rest of the world. In the U.K., Germany, Italy, and Ireland, for example, Showtime series live on P+. And in some smaller international markets, P+ programming can be found on SkyShowtime, a recently launched streamer that’s the result of a partnership with Comcast-owned Sky. SkyShowtime blends shows from P+, Showtime, and Comcast’s own Peacock. So while it may seem as if Showtime is getting short shrift in the States, the brand is integral to the ViacomCBS streaming strategy around the world. “The Paramount+/Showtime international profile is becoming a higher and higher priority,” Levine said. “Our shows, which have always had great international appeal, are now becoming strong assets for our own networks internationally.”

So why doesn’t ViacomCBS emulate what it does internationally and blend Showtime and P+ into one offering here in the U.S., as Ball and other observers argue they should? If I had to guess, it’s because company execs don’t want to risk losing out on any of that sweet, sweet bundle cash Showtime pulls in from older customers who still spend $200 per month on cable. Even though Showtime has been available in a direct-to-consumer form for six years now, most of its subscribers still pay for it the old-fashioned way, i.e., via cable. Indeed, ViacomCBS CEO Bob Bakish has suggested he thinks it’s more lucrative to get current Showtime customers to also sign up for P+ rather than hoping a combined P+/Showtime would bring in enough overall subscribers to offset the loss of cable subscribers. “We really like this strategy that spans free, pay, and premium because we’re convinced, and early data suggests we’re right, that it allows us to unlock the largest total addressable market,” he told analysts in November at a USB conference, referring to the company’s portfolio of Pluto, P+ and, Showtime.

WarnerMedia obviously made a different bet when it opted to include both HBO content and branding in its signature streamer, and so far, that gamble has paid off: HBO still has a robust linear business even as HBO Max continues to grow. On the other hand, Disney, like ViacomCBS, has — at least so far — also resisted suggestions it combine its two general entertainment streamers, Hulu and Disney+, into one offering in the U.S. Clearly what seems like a no-brainer to outside observers isn’t such a slam-dunk for the CEOs in charge. Still, as more consumers cut the cord and disconnect from cable, and streaming continues its rapid takeover of the TV universe, I think both ViacomCBS and Disney will ultimately decide supersizing their streaming plays makes more sense than maintaining them in separate silos. The only question is which one makes the jump first.

In my Sunday story for Vulture, Levine broke the news that his goal is to work with producers to launch season two of Yellowjackets before the end of 2022. If that happens, it will be a big departure from the recent trend toward big cable and streaming hits taking anywhere from 18 months to two years off (and sometimes more!) between seasons. “When you have a show that has this kind of a momentum, you don’t want to let it dissolve,” Levine told me.

I wasn’t shocked by the news, as Showtime has been pretty good at sticking to the decades-old production rhythms of linear TV (aside from the COVID-related delays which affected all platforms). But I still let out a little cheer inside when he told me about the plan. I absolutely respect that, in an age of $15 million per episode TV series, showrunners need to take more time to get scripts and production plans right. But TV is not film: Audiences develop deep relationships with characters, and long breaks between seasons can often serve to weaken those relationships (despite what some execs seem to think about building “anticipation”). Now let’s work on bringing back 13- and 22-episode seasons.

When Netflix raised prices for its DVD service back in 2011, annoyed consumers overwhelmed Twitter in snarky protest. Five years later, media coverage regarding prices going up for users grandfathered into older plans was so negative, the company partially blamed it for a higher quarterly churn rate. And last week, when Netflix said the cost of its most popular plan would be going up to $15.49 per month, the overall reaction was … crickets.

Okay, so that’s not entirely true. There were plenty of news stories about the hike, and obviously some folks complained on Twitter. There will also surely be a percentage of price-sensitive Netflix U.S. subscribers who decide to cancel their memberships because of the increase in the coming weeks and months. We won’t really know how many until next spring, when Netflix reports its first-quarter earnings and says how many subscribers it added or lost.

Overall, however, the cultural reaction to this latest example of inflationary pressure has been muted, and Wall Street actually loved the news: Netflix’s stock price moved higher in the days following the announcement. That’s probably because investors are convinced whatever money the streamer loses from cancellations will be more than offset by the higher revenues from the monthly fee increase. (Netflix execs will probably say a bit more about its thinking about pricing during today’s earnings report, which will be released a few hours after this newsletter hits your inbox.)

Meanwhile, as Lucas Shaw over at Bloomberg noted in his Screentime newsletter over the weekend, at $15.49 per month, Netflix’s most popular plan will replace HBO/HBO Max as America’s most expensive major streaming service. Since it launched in the early 1970s, HBO has always been synonymous with premium TV and has usually been the costliest video service in the marketplace. I don’t think anyone at WarnerMedia is going to fret over Netflix (perhaps temporarily) stealing away that crown, but it is yet another sign of just how successful Netflix has become in the nine years since it jumped into the original programming business. The company has always said it views subscription fees as seed money to be used to create more and more content, justifying price increases by promising to give audiences even more new stuff. So far, that virtuous cycle has paid off.

The danger in the strategy is that Netflix really does need to keep finding new, interesting content to keep audiences hooked. Simply having a library stacked with thousands of hours of movies and TV shows from previous years isn’t enough: Netflix and its subscriber base are addicted to the new. That’s why very few Netflix originals these days make it past three seasons. There are exceptions for extraordinarily popular or cost-effective titles, with series such as You, Emily in Paris, Stranger Things, Cobra Kai, and The Crown all on track to survive at least four seasons. But in general, Netflix moves on from shows pretty soon after they sense a series has faded a bit in the culture, or before their production costs get out of control.

Thanks to Netflix’s baby steps toward transparency, observers can measure just how much the streamer cares about performance when making renewal decisions. The company’s top-ten lists now break out how shows perform between seasons, revealing how many hours consumers slurp down within 28 days of a title’s release. I found it interesting for example that Netflix this week said that season two of The Witcher saw viewership dip around 11 percent from the show’s freshman outing a year earlier. To be fair, season two was still a massive success, ending up on Netflix’s regularly updated list of its ten most-streamed series. But despite all the hype surrounding season one, and even a relatively short turnaround between seasons, the show wasn’t able to expand its audience. That’s not unprecedented: Part two of Lupin didn’t match part one, despite the slow-building buzz around the French show. Yet some other big shows, including You and Stranger Things, have built audience every season they’ve been around.

In the case of The Witcher, the small decline won’t matter to its immediate future, as Netflix green-lit season three, along with some spinoffs, last summer. But most Netflix series won’t be so lucky, as the streamer has proven to be increasingly impatient with shows that don’t seem to be connecting to a big audience. The critically praised and culturally important dramedy Gentefied is likely a good example of this. It was recently canceled after just two seasons, despite a ton of goodwill and good reviews. If you look back at Netflix’s top-ten lists for the first few weeks after its sophomore year dropped on November 10, however, you’ll find that Gentefied didn’t crack the top ten for even a single week. That fact probably is not irrelevant to its fate.

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