(NASDAQ:NFLX) has made a big bet on original programming, investing $100 million over two seasons to produce its star-studded political drama, House of Cards
, which premiered at the start of February. While Netflix has declined to release information on how the series has fared thus far, a survey conducted last week by financial services firm Cowen and Co. found that Netflix subscribers are less likely to cancel their service thanks to the Kevin Spacey-starring drama.
Cowen surveyed 1,229 respondents on February 12-13, with 28% being Netflix subscribers and another 18% that were non-subscribers with access to a Netflix subscription. Among subscribers, 86% said they were less likely to cancel their service after watching House of Cards
, reported Deadline
, which is good news for Netflix, as it faces strong competition from the likes of Amazon
(NASDAQ:AMZN) and other streaming services.
Viewers’ response to the series was also positive, with 35% of them calling it “exceptional,” while 43% said it was “good.” Respondents also overwhelmingly liked the idea of releasing all episodes of a series simultaneously, with 90% approving of the strategy that's known to encourage to "binge-watching."
“If future original programs are as successful as House Of Cards
, it likely leads to a stickier subscriber base over time,” Cowen & Co. analyst John Blackledge said, according to Deadline. Netflix currently averages a churn rate – the rate at which subscribers quit – of around 40% to 50% annually, according to Sanford C. Bernstein
, with many subscribers often quitting and then re-joining to catch a particular series or movie.
Of concern to the cable companies like DIRECTV
(NASDAQ:DTV), Time Warner Cable
(NASDAQ:CMCSA), and Dish Network
(NASDAQ:DISH) was that 22.6% of Netflix subscribers said they had cancelled their cable or satellite TV service. Extrapolated nationwide, that would come up to 6 million households across the US that have cut the cord, not enough to cause panic at the companies but still noteworthy. That said, given that the survey sample size is relatively small, “we are not raising the alarm on the cord cutting debate,” said Blackledge. Cable companies will also be looking to see how many new subscribers Netflix will manage to attract with House of Cards
and with future original series like Arrested Development
, to which the survey does not provide answers.
(See also: After 'House of Cards,' Should Netflix Get Into Original Movies?
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.