The Curious Case of Netflix Originals

25 Jul, 2013 By: Erik Gruenwedel

"House of Cards"

The Wizard of Oz had a good thing going until Toto got in the way.

Netflix and its original programming could be be operating in the same vacuum of wishful reality.

With 14 combined Emmy nominations led by “House of Cards,” “Arrested Development,” and “Hemlock Grove,” Netflix’s original series would appear to be the subscription video-on-demand pioneer’s emerging Ace card as it attempts to transform the TV landscape and grow subscribers.

Except that after door-to-door campaigns in West Los Angeles (to help secure nominations), online, billboard, taxi ads, and free publicity at the White House Correspondents' Dinner, among other chatter, no one really knows just how many people have actually watched the shows — a reality that began with Nordic black comedy “Lilyhammer last year.

That’s because Netflix won’t release the numbers — no matter how many times moderators Rich Greenfield from BTIG Research and CNBC’s Julia Boorstin asked, cajoled and pleaded with CEO Reed Hastings and chief content officer Ted Sarandos to do so during Netflix’s July 22 investor interview webcast.

The official line is that since Netflix doesn’t have advertisers, it doesn’t feel compelled to divulge ratings the way ad-supported network TV programs do. It’s a clever excuse and tactical strategy right out of the playbook of fictional House minority whip Francis Underwood (played by Kevin Spacey) in “Cards.”

“From this moment on you are a rock. You absorb nothing, you say nothing, and nothing breaks you,” Underwood tells his bodyguard.

Indeed, if scuttlebutt and conjecture equaled Nielsen households, Netflix certainly has a few winners on its hands. But hype isn’t hard data, and so the question festered.

Sarandos said all of Netflix originals are drawing “TV size audiences,” adding that those obsessed with data should look to Netflix’s renewal of a second season as a “very positive sign” regarding viewership.

“If we are renewing programs people aren’t watching, then we are creating a huge opportunity cost in our content spend,” which he said would result in Netflix not having the money to spend on content subscribers do want to watch.

Then the CCO threw a curve ball.

Sarandos said that each original series had outperformed the previous original during its initial seven-day streaming period. That meant that largely panned gothic horror series, “Hemlock Grove,” drew larger audiences than “Cards,” and just-released women’s prison dramedy, “Orange is the New Black,” outdid them all, including the reboot of Fox dark comedy, “Arrested Development.”

The seven-day window is significant since Netflix makes all episodes of its originals available on street date.

Indeed, Hastings admitted “Development” resulted in a small bump of new subscribers, which analysts speculate meant about 100,000 new subs. A modest tally considering the show’s ardent fan base and pre-launch word-of-mouth.

Perhaps “Cards,” which appears a lock for an Emmy, was nothing more than a polished serial hyped by many and observed by few.

The Curious Case of Netflix Originals

About the Author: Erik Gruenwedel