Highlights from Netflix’s Q2 Earnings Hangout

/ Jul 22, 2013

VIS_NetflixMoney

Netflix still isn’t releasing numbers on how many of its originals are performing. In fact, if you watched the company’s Google+ Hangout to answer investors’ questions about its Q2 earnings report, you witnessed a pretty entertaining (or frustrating) dance around that very topic. When asked about how Netflix defines success, CEO Reed Hastings and chief content officer Ted Sarandos routinely referenced things like the fact that they have renewed every true original for a second season, or how much social and word-of-mouth was generated by the shows. Sarandos went as far to as to say that every original drew “TV-sized audiences.”

The executives also cautioned that since Netflix isn’t handcuffed to defining success in terms of how a show performs during the first couple of weeks, the shows have a longer lifespan on the platform. In other words, just because Show A got X number of viewers, it doesn’t mean that number can’t grow as Netflix routinely refines how it markets and recommends programming to individual subscribers.

These are all talking points you’ve heard before. So with those out of the way, here are some interesting things I’ve picked out from the 38-minute session, which you can stream in full below if your heart desires.

  • Commenting on why Netflix didn’t hit the top-end of its subscriber forecast, and how much of an effect originals like “Arrested Development” and “House of Cards” had on subscriber additions, Hastings, Sarandos, and CFO David Wells advised that people don’t generally subscribe to Netflix for just one show. “It will take several shows for folks to be engaged,” said Wells. “If you think about whether you join HBO or Showtime because of one or two shows, ‘Game of Thrones’ is the only example where people have thrown out that it is a single show, otherwise it’s multiple shows. It will take us awhile for our originals to get there.” Though Sarandos did add that with every new Netflix original series, the viewing audience and the total hours viewed has “grown sequentially.”
  • “Orange Is the New Black,” drew as many viewers during its first seven days on Netflix as any of the service’s other original series, according to Sarandos. He credited this to a “compounding positive affect” the company’s move into original programming has had among its subscribers. “People are taking more confidence with the idea of Netflix originals, which is creating some excitement for upcoming seasons as well as upcoming new series. The brand is starting to mean something to viewers already, even though we only started doing this in February,” he said.
  • Netflix originals are routinely meeting the company’s viewership forecasts, enough so that Netflix had the “confidence” to renew “Orange Is the New Black” for a second season before it even aired its first, according to Sarandos.
  • Hastings said that Netflix is “absolutely” looking into owning more of its original content in the future, since right now the producers of shows like “House of Cards” have the ability to monetize the content via DVD/Blu-ray sales and other content deals.

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