Peter Kafka

Recent Posts by Peter Kafka

Was “House of Cards” Worth It for Netflix?

house-of-cardsNetflix got into the HBO business with a bang in February when it launched “House of Cards.”

The much-hyped miniseries had a big budget, big names in front of the camera and behind it, and a Big Idea — binge viewing! — that generated even more buzz for the launch.

Today, the company releases its Q1 numbers, so lots of investors are going to be wondering what all that meant. They will have questions for Reed Hastings and company along the lines of:

  • How many people watched the series?
  • How many people signed up with Netflix to watch the series?
  • How many people who signed up with Netflix kept subscribing after they watched it?
  • What has happened to “House of Cards” numbers since the initial burst of buzz?

They are likely to be very disappointed: Netflix has already announced, over and over, that it won’t release anything like ratings numbers for the show. That should also apply to any kind of discussion about the show’s impact on subscriber numbers.

And even if Netflix did want to talk up numbers for the series, doing so would highlight the bind the company has when it comes to discussing any particular show or content deal. Netflix wants to brag to consumers and investors about the content wins it gets, but it doesn’t want to suggest that it’s overly dependent on any one show, studio deal or even a genre — because if it does, it becomes vulnerable if that stuff goes away (See Sony, Disney circa 2011.)

For what it’s worth, my uneducated gut guess is that even though you don’t hear people buzzing much about “House of Cards” anymore — my Twitter stream is full of chatter about “Game of Thrones” and “Mad Men,” and it spikes every Sunday, when a new episode comes out — Netflix should still be very happy with the splash it made with the show.

It most likely can’t and won’t spend anything like that on its other original programs — note the comparatively silent launch for “Hemlock Grove” this month — but getting a lot of people to spend a lot of attention on anything is a very hard task in 2013, and Netflix pulled that off. That may be worth $100 million in programming costs alone.

Now, on to today’s numbers: Wall Street is expecting Netflix to report just over a billion in revenue today, and earnings of 18 cents a share or 19 cents a share, depending on who you ask. But investors will likely focus more intently on subscriber numbers and guidance for future quarters.

Most analysts are expecting to see Netflix post more than 29 million streaming-only U.S. subscribers. And here’s a useful chart from Bernstein’s Carlos Kirjner to evaluate the Q2 guidance you’ll see today:

netflix q2 expectations


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