It optimizes for local maxima, rather than taking the risks associated with finding larger global maxima.
Or, in other words: It creates lots and lots and lots of pretty-good stuff of particular types with broad appeal, rather than allowing diversification into some stuff that appeals very strongly to group A, some other stuff that appeals very strongly to group B, etc.
It makes the publishing/Netflix executives richer, but our culture poorer.
1. Unlike network television, space isn't limited, so you can make a good show which will only appeal to 20% of the audience.
2. The amount people watch doesn't affect revenue, just whether they renew or not. So it's now better to make one show that someone will really love, than seven shows that they will be vaguely into, but see as interchangeable with seven others on a different platform.
If anything, I think Netflix originals are overoptimised for creating cult hits along niche audiences.
Amazon offers 70% royalties to indie authors.
YouTube offers peanuts to indie film makers. Netflix offers nothing.
Film-making is more expensive than novel writing, and there is a higher barrier to entry. Few indie film-makers are going to stick with it, unpaid, for multiple years. If they can receive funding, then that whole paradigm will change.
Patreon made a few steps in that direction, but I think crowd-funding has limits.
If Google/YouTube were to do what Amazon did, and offer a huge royalty share of profits...? That would turn everything around.