Netflix's Brilliant Marketing Tool: Ratings Silence

Feb 19 2014, 12:28pm CST | by

Netflix's Brilliant Marketing Tool: Ratings Silence
Photo Credit: Forbes Business

On Monday, my colleague Brian Solomon reported that on the first day Netflix released the entire second season of House of Cards, viewership surged 8 times over last year’s first season release. That’s big news for the streaming company. Netflix is built on subscriptions and the more people hear how popular a show is, the more they’re going to want to sign up.

But on closer inspection, the number doesn’t necessarily tell us much. Based on data from broadband optimizing  company Procera, 16% of people from one US cable network watched at least one episode of House of Cards the day it hit Netflix. That was up from 2% for the first season opener.

But which cable network? Comcast has 20 million customers. Cox Communications has 4.4 million. Not all of those people subscribe to Netflix. And can the 16% number be extrapolated to all of Netflix’s subscribers? If so, that means 5.34 million people watched House of Cards the first day.

For the moment, let’s take that as given. Five million viewers is nothing to sneeze at. But to put that into perspective, that’s about the same number of people who watched America’s Funniest Home Videos on ABC Sunday night. By contrast, 13.3 million people watched The Walking Dead that night.

Do 5 million viewers equal the amount of hype surrounding the opening of House of Cards season 2? Maybe. But if Netflix did, in fact, reveal that 5 million people had watched House of Cards the first day, it would have a much bigger problem. Once the company announced viewership for one show, investors would expect it to reveal much more information about how many people are watching.

That could be a disaster for Netflix. House of Cards is the company’s flagship show. There’s no question that the expensive piece of original programming has become part of the zeitgeist and that plenty of people are watching it.

But right now, Netflix is really a one-trick pony when it comes to original programming. Orange is the New Black might have caught fire or it might have just become popular with people in my feminist-leaning social networks. What would happen if Netflix revealed that fewer than 1 million people actually watched Orange is the New Black? They were just the right, chatty, media savvy, 1 million people.

As any TV producer will tell you, creating one hit show is an amazing piece of luck and skill. Creating lots of hit shows is much harder to do.

Netflix CEO Reed Hastings has been getting a lot of mileage out of throwing shade on HBOFrom a recent New York Times article:

Reed Hastings, chief executive of Netflix, has been routinely provocative. In a recent earnings call, he pointedly tweaked his counterpart at HBO, Richard Plepler. Asked about HBO’s endorsement of password-sharing for its own streaming service, HBO Go, Mr. Hastings joked that perhaps Mr. Plepler wouldn’t “mind me sharing his account information.” He then joked that his rival’s password was “Netflix” followed by an expletive.

But HBO has done what Netflix can only hope to do. It has created a mass of high-quality content. HBO doesn’t just have Game of Thrones. It has Game of Thrones and Girls and True Detective and Boardwalk Empire not to mention made-for-HBO movies like Behind the Candelabra and Game Change. HBO can release its viewer numbers because even if The Newsroom doesn’t do that well, there’s always another show on the way that will do better.

Netflix doesn’t have that – yet. It has impressive subscriber numbers, a high-flying stock and lots of buzz. Keeping that buzz going without letting investors get too close of a look at what’s going on behind the curtain is a great plan for Netflix. At least until it builds up a much stronger bench of original programming.

Follow me on Twitter at DorothyatForbes.

Source: Forbes Business


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