Welcome back to What I’m Hearing+, my new weekly complement to Matt Belloni’s flagship property, focused on the streaming industry and the analytics behind it all. If this email was forwarded to you, click here to subscribe.

Mentioned in tonight’s email: Ryan Murphy, Shonda Rhimes, J.J. Abrams, Dana Walden, J.R.R. Tolkien and Jeff Bezos. But first…

• Peacock hits 15 million subscribers: Peacock’s slow growth over the past two years is a topic on every earnings call, but NBCUniversal chief Jeff Shell told CNBC today that the streamer hit 15 million subscribers this quarter. That’s up 2 million from last quarter, when growth was stagnant. The new number is tiny compared to the titans — Disney+ is sitting at 44.5 million domestic subs, and Netflix at 74 million. Even though Netflix lost 1 million subs and Disney+ only gained 100,000 in the same period, the growth story is much clearer. The bigger issue facing Peacock, of course, is that it’s caught between pivoting into a stronger ad-supported video business and wanting to lean into the harder-to-grow SVOD side. Meanwhile, consumers still don’t really know what Peacock is all about, something NBCUniversal wants to change by taking back more series from Hulu, which makes it increasingly hard to sell the value of a monthly service.

• But… Community!: Peacock may have its challenges, but betting on a Community movie and securing rights to the NBC show’s catalog is smart. Community has a dedicated fanbase, and has found a larger audience during the pandemic as demand for the series grew tenfold. The movie is also something that fans have waited for—giving it that customer acquisition potential—and it almost certainly wouldn’t perform theatrically. On Peacock, the movie and the show, paired with Peacock’s collection of classic comedy series, may help to increase customer acquisition and retention. It could be just the win NBCUniversal needs—a third lever besides the NFL and Dick Wolf.

• Paramount’s Smiling: Last week, I wrote about how horror is having a moment both in theaters and on streaming. Paramount’s Smile continues that trend, amassing $22.6 million during its opening weekend—marking the first time a film crossed $20 million at the domestic box office since Bullet Train in August. NBCU’s Shell told CNBC today that The Black Phone led to a bump in activity on Peacock; ideally, Smile will do the same for Paramount+ when it lands there.

Nielsen reported last week that The Rings of Power’s first two episodes amassed 1.25 billion minutes watched, or some 9.5 million completed views, according to my calculations. (Amazon noted that the series “attracted more than 25 million viewers globally” on its first day.) That’s decidedly less than the combined 9.9 million viewers that Warner Bros. Discovery says tuned in for House of the Dragon across linear and HBO Max on a single night in the U.S. alone. Yet not only is Rings underperforming its biggest fantasy competitor, it is also only marginally surpassing less expensive content on the Prime platform. The third season of The Boys, for instance, logged 949 million minutes over its first three episodes when it debuted, and The Wheel of Time pulled 1.16 billion minutes over its first three episodes when it premiered. Even setting aside the $250 million that Amazon paid upfront for rights to the I.P., both were produced for a fraction of what The Rings of Power cost.

As always with emerging industries, there are apples-to-bananas issues with comparing Rings to Dragon along a single dataset. To wit, the time period that Nielsen collected data (Aug. 29 through Sept. 4) means that viewership for The Rings of Power, which dropped two episodes, was counted for four solid days while House of the Dragon’s third episode only received a couple of hours of measurement. Moreover, because House of the Dragon also airs on linear TV, there are measured hours that don’t make it into Nielsen’s recap. Regardless, both inputs suggest that House of Dragon has out-rated Rings in ways that we can’t yet measure.

But it’s also crucial to examine other data points to paint a more complete picture—not just global viewing, which is frequently left out of these numbers, but also whether a series brings in new subscribers, or how likely a series is to retain them. As always, we have to rely on various proxies. House of the Dragon, for instance, maintained a much stronger presence on Google Trends between Aug. 30 and Oct. 3, averaging a score of 45 to The Rings of Power’s score of 5.

We see similar data patterns at Parrot Analytics, where I’m director of strategy. While both shows are powerhouses, boasting respective demand scores of 30.5x (The Rings of Power) and 54.5x (House of the Dragon), the average demand of all series globally, House of the Dragon has consistently just edged out The Rings of Power in every single country.

A few final data points: The Rings of Power over-indexes with millennial males (68 percent male, 37.7 percent millennial), and shares a lower affinity to Amazon’s overall Prime Video catalog, meaning that new customers coming in for The Rings of Power aren’t as well retained once the series ends, according to Parrot. (Note: This is just from a content perspective. I acknowledge that Amazon has a whole retail side to this equation.) House of the Dragon, meanwhile, has a very strong affinity score, meaning that audiences who come in for the series are more likely to stay once the series ends. Also, House of the Dragon’s audience is also more evenly split (43 percent female audience) and leans younger (40 percent between the ages of 24 and 30).

I’ll leave the creative merits to the critics—the reviews are practically identical on Rotten Tomatoes—but based on all the public data available from first and third parties, House of the Dragon has been more successful than The Rings of Power. Neither is a slam dunk just yet, but of course both series are likely looking at multiple seasons to come. In fact, on some fundamental level, the two series’ impact won’t accurately be measured for years. Dragon is an extension of a recent cultural phenomenon. Rings is the first stab at an ambitious multi-season revival of a 70-year-old classic novel and a 20-year-old classic film franchise. We’re only at the beginning of Prime’s plans. It’s indeed possible that this season will one day serve as a retention tool for future Prime subscribers signing up to watch the latest installment ten years from now.

Every executive that I have spoken to about The Rings of Power points back to the same statistic that will be key to see if the show is really “worth” what Amazon spent: decay. House of the Dragon has done a far better job of holding onto its audience week after week, but if Amazon can stave off high viewership and demand decay, then that big price tag—a whopping billion dollars when you include the production and marketing budgets alongside the cost to acquire the rights—may not hang over Amazon’s head like a sharp guillotine blade a couple of years from now.

It’s a strong moment for Murphy, whose Netflix deal ends in 2023. But it also raises real questions about the financial logic of paying nine-figure sums for a hitmaker to recreate the sort of value Murphy brought to FX with the American Horror Story franchise. The economics of streaming have changed dramatically, of course, in the four years since Murphy started working with Netflix. Is the era of the mega-overall deal toast as companies cut costs, manage the recessionary headwinds, and look to scale their domestic and international subscriber base? Or is Murphy’s nearly-complete run at Netflix part of a larger story about to take place?

Overall deals have always been an essential part of the TV landscape, even if few ever reached the nine-figure level of Netflix’s deals with Shonda Rhimes and Murphy, in 2017 and 2018, respectively, or WarnerMedia’s massive deal with J.J. Abrams’s Bad Robot in 2019. Back then, Netflix didn’t necessarily need its marquee showrunners to deliver huge numbers of new subscribers. Rather, the Murphy and Rhimes deals were part of a concentrated effort to demonstrate that Netflix could be a home to the type of creative talent being courted by the prestige cable players like HBO and Showtime, and provide more freedom than the broadcasters. Since Netflix originals are often tied to the platform for years and years, the idea was that a show could always find its audience down the line. And anyway, Netflix could rely on access to related library titles from its partners to keep viewers hooked: Murphy’s American Horror Story to complement Dahmer, as an example of how it could work, or pushing Grey’s Anatomy and Scandal after Rhimes’ Bridgerton.

Since then, of course, some Netflix’s partners have become its competitors. Disney spent hundreds of millions of dollars clawing back shows like American Horror Story and the Marvel collection for Hulu and Disney+. Meanwhile, sub growth at Netflix plateaued and began to fall. In 2018, when Netflix announced its deal with Murphy, the company added just under 25 million subscribers and increased revenue by 36 percent to more than $11 billion. In its last quarter, Netflix lost 1 million subscribers. Increasing costs brought on by strong competition, slowing global subscriber rates, and higher churn in its most lucrative market have all made every penny count more than ever. Content is never a guaranteed bet, and it’s a fool’s task to try to scale on talent alone, but the financial reality and library overlap back in 2018 created different stakes for those big nine-figure deals.

Overall deals aren’t going to disappear. This is an industry built on relationships, and on taking bets on those relationships. The reality is that it’s still a great time to be a creator, and the cost for working near exclusively with the top 1 percent is only going to get more expensive as Apple and Amazon continue their investments in the space. But the overall goal of those overall deals will be to create franchisable work, a steady rhythm of hits, and zeitgeist moments. Rhimes has given Netflix a potential franchise in Bridgerton, with room for real world experiences, podcasts, and video games—all in development or reportedly in development—to help expand Netflix’s business. Inventing Anna found its own cultural moment, right down to Halloween costumes. Zack Snyder’s Army of the Dead spinoff, Army of Thieves, amassed 72.8 million completed views within its first 28 days, and led to a significant increase in Army of the Dead viewership, as reported by Netflix.

But these sorts of deals are going to evolve. When Murphy, Rhimes, Kenya Barris, and others signed nine-figure deals, Netflix needed to prove it could be a home to showrunners. It’s the same reason Netflix took a bet on a Martin Scorsese movie, The Irishman, that no other studio could justify at the time. The Netflix entering 2023 is vastly different, and the structure behind some of those mega deals will change. When Murphy’s contract is up next year, you can imagine that Disney general entertainment content head Dana Walden would love to bring him back home to the Mouse House (now that Disney owns Fox). The question is whether Netflix would be willing to play ball at the level with Murphy tomorrow the same way it did five years ago.

So let’s play some media chess. Where is Murphy’s contribution even more valuable? A big part of all future value will include whether Murphy’s previous series are available, where he’s creatively fulfilled and has the same freedom Netflix seemed to give him, and where his audience is currently subscribed. The easy answer is Disney, including Hulu, which is the streaming home to FX, and where Murphy’s other series are available. Having Murphy create more value for Disney Television as a whole, spread out across linear (FX, ABC) and streaming (Disney+, Hulu) very likely would be the most beneficial to both parties.