Less than a year after it started offering original programming, Netflix showed Hollywood its muscle last week by nabbing six Golden Globe nominations — more than ABC, CBS and NBC.
Armed with data on the likes and dislikes of its 33 million subscribers, which allow it to come up with content directly aimed at its target audience, Netflix has become a company that is admired as much in Hollywood as it is on Wall Street.
Netflix has created “House of Cards,” starring Kevin Spacey, and “Orange Is the New Black,” two of the most talked-about shows on TV, and revived the quirky “Arrested Development.”
Presenting these kinds of buzz-worthy shows has enabled the company to make not only the broadcast nets but also the likes of HBO, Showtime and AMC take notice.
“Netflix is different than mainstream Hollywood in so many ways,” Peter Fader, a professor at the University of Pennsylvania’s Wharton School of Business, said in an interview.
“I love the way Netflix approaches content. It is not as interested in coming up with blockbusters as every other Hollywood entity. Netflix is not [looking for] a show with the broadest appeal. It wants to have content that the typical Netflix viewer would want to see — and uses it as a way to recruit customers for Netflix,” Fader said.
But this effort is pricey to Netflix. Variety reported last March that CAA literary agent Peter Micelli said the cost to produce “House of Cards” began at $4.5 million an episode, and the figure eventually climbed “way above that.”
For Netflix, the payoff is in the “buzz,” the hard-to-pin-down but essential quality for any big entertainment success. The public thinks Netflix is cool, and anything in its proximity is sure to benefit.
Consider that when AMC’s “Breaking Bad” — the most buzzed-about series in years — won the Emmy in September for Best Drama Series, creator Vince Gilligan said: “I think Netflix kept us on the air. I don’t think our show would have even lasted beyond Season 2. It’s a new era in television, and we’ve been very fortunate to reap the benefits.”
Netflix’s potential audience keeps growing, thanks to the other successful parts of the company.
In the third quarter, Netflix wooed 1.3 million new US subscribers and reported revenue of $1.1 billion, which was 22 percent above its third-quarter number last year. When those data were announced Oct. 21, Netflix stock soared 10 percent, to $393, after ours.
Janney Capital media analyst Tony Wible recently wrote in a report to investors that he is maintaining a “buy” rating on Netflix and sees a price of $450 as fair value. (Netflix closed on Friday at $368.97, up 4.1 percent on the week.
So stay tuned. Things are just getting interesting.