Last week, Netflix released their first-quarter 2013 earnings report, and it showed a gain of over 2 million domestic subscribers, bringing their active subscriber base to 36 million (which is more than what HBO currently has in the United States). New Netflix subscribers may have been attracted to original Netflix shows.
The streaming company didn’t always offer on-demand content. The company began as a DVD-by-mail service where they mailed DVDs from a subscribers list. The subscriber would watch the movies and then send them back to the company when they were ready for another one. As technology developed, so did Netflix’s services. In 1999, the company began offering a subscription-based digital service providing on-demand content to viewers.
Although the company continued to add to its content model, it wasn’t reaching the revenues it desired and hit a plateau. To help increase viewership, Netflix began providing and producing its own television shows.
Netflix shows are a new service the online streaming provider began offering as a way to stay ahead of its competitors. Netflix’s first original program, House of Cards, brought in a ton of media buzz as all the episodes were available the same day, giving Netflix subscribers the ability to binge view.
Due to the popularity of House of Cards, the chief content officer Ted Sarandos said more Netflix shows are on the way.
“The goal is to become HBO faster than HBO can become us,” said Netflix’s chief content officer Ted Sarandos earlier this year.
“The high level of viewer satisfaction implies we were able to target the right audience without the benefit of existing broadcast or cable viewing data, and the strong viewing across all our markets gives us faith in our ability to create global content brands in a cost-effective, efficient way,” the company said.
However, not everyone feels the same about the quality and revenue intake from Netflix’s original programming. An analyst from Wedbush, Michael Pachter, said the production of the shows are too high and are barely performing.
“Although Netflix’s ownership of only partial rights is not a new disclosure, we believe that in recent months, Netflix, Inc. share price appreciation has been driven in part by the perceived potential upside for the company from House of Cards success,” said Pachter.
Pachter added that he felt networks like HBO will end up seeing more gains in the long run due to their syndication and DVD rights verses Netflix spending a majority of its time and money trying to get subscribers to join on a monthly basis.
Regardless, Netflix continues to boast about its programming model and just recently announced it would be debuting even more original shows. Netflix’s new shows slated to be released (in full seasons at a time) over the next year include the return of Arrested Development, a new sci-fi thriller, Sense8, an animation series called Turbo: F.A.S.T., a thriller/mystery called Hemlock Grove, and of course, another season of House of Cards.
Only time will tell if Netflix is able to create a new model for not only on-demand content, but for original programming as well.
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