The controversial teen drama is scheduled to begin Season 3 production on Monday, but several cast members are still renegotiating their contracts, Deadline reported last week. Lead actor Dylan Minnette is seeking $200,000 per episode, with supporting actors seeking $150,000 per episode. That's an eye-popping jump from the $20,000 to $80,000 per episode cast members reportedly earned for the first two seasons.
Netflix doesn't share its viewing numbers, to the extent that social media buzz is a proxy for a show's popularity, "13 Reasons Why" was the single most-talked about Netflix series last year according to data from Fizzology.
Nielsen data estimated that its Season 2 premiere had 6.08 million viewers in the U.S.within the first three days of release, according to Nielsen estimates, about double the number that tuned in for the premiere of "The Crown," Netflix's flagship historical drama (Netflix has disputed those estimates, calling them "not accurate, not even close.")
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"13 Reasons Why," which deals with the aftermath of a teen suicide, has also attracted a significant amount of controversy for its subject matter. But Netflix clearly considers it a win, with executives talking up the show's success.
"What none of [our competitors] will have is 'Stranger Things,' and what none of them will have is '13 Reasons Why' and 'Wild Country' and 'Evil Genius,'" said Netflix's content chief Theodore Sarandos on a May earnings call. "So, that's why I think that the unique nature of our programming is something that we've got to really focus on...these three are some of the most watched movies and television shows in the world."
Netflix's unique content may be its advantage, but many analysts worry about rising costs of production and Netflix's negative free cash flows relative to revenue. Netflix burned $559 million during the second quarter, and forecasted negative cash flow between $3 billion and $4 billion for 2018.
If more talent asks for large raises -- the "13 Reasons Why" negotiations were likely spurred by a similar renegotiation by the cast of "Stranger Things," Deadline reported -- that won't do much keep costs down. Netflix didn't immediately respond to a request for comment on the salary negotiations.
Content costs are expected to rise owing to competition from entrenched players like HBO, Starz and Amazon.com (AMZN - Get Report) , in addition to newer entrants who are flush with cash such as Apple Inc. (AAPL - Get Report) and soon, Disney (DIS - Get Report) . "Apple's entry will likely result in higher bids (and higher cost) for content, and may limit Netflix's ability to maintain its library," said Wedbush's Michael Pachter. "I don't expect Apple to take share, per se, but think its entry will increase Netflix's cost for new content."
Netflix is down about 13% since it reported earnings on July 16.