Original Content Pays Off

For Netflix:

The company added more than 3 million subscribers (2 million in the U.S.) last quarter, which, at $7.99 per subscription, means revenue nearly equaled the full price of the $100 million “House of Cards” series that debuted early this year.

Did “House of Cards” lure 2 million more people, alone? No. We don’t know how many Netflix subscribers watched the series, and we certainly don’t know what share of the new subs joined just specifically because of the Kevin Spacey vehicle.

So what did “House of Cards” really buy? Allegiance. Nearly 90 percent of Netflix subscribers said “House of Cards” made them less likely to cancel, according to a survey by Cowen and Co.

Notice how content matters commercially. People will pay for good stuff – not listicle crack. Zachary M. Seward points out that “Netflix now has 29.2 million people in the US subscribed to its $8-a-month streaming plan, which is, for the first time, greater than HBO’s domestic subscription base of 28.7 million”:

The comparison between Netflix and HBO isn’t perfect, but they increasingly appear to be on similar trajectories. Both started by offering only movies that had long been out of theaters, then ventured into original programming—HBO in 1997 with Oz and Netflix earlier this year with House of Cards. Meanwhile, all of HBO’s customers buy it as an add-on to existing cable TV subscriptions, but HBO Go now offers all of the network’s programming over the internet, like Netflix. At the moment, it’s just a free perk for existing subscribers, but executives at HBO parent Time Warner have been hinting at a future when HBO Go is sold directly to consumers.

“The goal is to become HBO faster than HBO can become us,” Ted Sarandos, Netflix’s chief content officer, put it recently.

(Video: Trailer for the Netflix Original Hemlock Grove, which has gotten bad reviews but appears to be popular with Netflix users.)