Peter Kafka

Recent Posts by Peter Kafka

Netflix’s No-Name Show Beating “House of Cards” and “Arrested Development”

orange is the new blackSometimes it’s hard to figure out what makes a stock move.

But occasionally it’s simple: Netflix shares dropped last night because Netflix added 630,000 U.S. subscribers in Q2 — which is what the company suggested it might do — instead of a number like 900,000 subscribers — which is what Wall Street was hoping for.

Fair enough. If you’re a high-flying story stock, you don’t have any margin for error.

Netflix might win back a bit of investor confidence if it released viewership numbers for its highly touted original shows like “House of Cards” and “Arrested Development.” But it has promised never to do that, and so far it is keeping its word (though J.P. Morgan analyst Doug Anmuth, doing some back-of-the-envelope math, guesstimates that “Arrested Development” may be responsible for more than 100,000 new U.S. subscribers).

If you are looking for something concrete to say about Netflix’s foray into original programming, though, the company was willing to offer one tidbit, which it made a point of mentioning twice during its earnings call: Every time Netflix has rolled out a new show this year, its first-week ratings improved on the previous show.

That is: “Arrested Development” did better in its first week than “House of Cards” did in its first week, both in terms of viewer numbers and hours viewed. That isn’t a huge surprise, because “House of Cards” was a new show, and “Arrested Development” was a reboot of a series with a big fan base.

But “Orange Is the New Black,” which debuted earlier this month, did better than any other show Netflix has released.

And that is surprising.

While “Orange Is the New Black” got glowing reviews, many of which argued that the women’s prison dramedy may be Netflix’s best series to date,* it got very little hype. Especially compared to “House of Cards” and “Arrested Development,” which featured tons of famous names and lots of high-profile marketing.

But unless you know the name of the actor best known for having sex with a pie, you probably won’t recognize anyone in “Orange Is the New Black.” People are either watching it because Netflix suggests it (Netflix said more than 75 percent of viewing comes via its recommendation algorithms) or because people they know are suggesting it.

Again, we don’t know how many people are actually watching these shows, period. So it’s possible that there’s a less-positive explanation for the increases: Maybe “House of Cards” had almost no viewers, so beating those numbers is no big deal.

Still, more viewers are better than fewer viewers, period. And if you’re a Netflix bull, you would argue that more viewers watching a show they know nothing about — except that Netflix made it —  is really good.

So is that enough to keep Netflix investors happy?  

* It’s quite good! We’ve knocked out five so far.

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I’m a giant vat of creative juices.

— David Pogue on why he’s joining Yahoo