The One Important Number Netflix Isn’t Giving Out
Business + Economy

The One Important Number Netflix Isn’t Giving Out

To say that it’s been a big week for Netflix would be something of an understatement. In a quarterly earnings report issued on Wednesday, the streaming content giant said it had broken through the 40 million barrier in US based subscriptions and its foreign members broke the 20 million mark.

The company added 2.25 million members domestically, 2.6 million internationally, and reported a Q1 profit of $312 million, exceeding the forecast by $19 million.

Following the announcement Netflix stock soared -- by the closing bell on Thursday the price was up 18 percent, finishing at $562.05 per share. Its market value has surpassed that of the old guard mainstay, CBS.

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While some might see Amazon Prime, HBO Go, SlingTV and Playstation Vue as threats to Netflix’s dominance, CEO Reed Hastings believes that the increasing numbers of streaming service will be good for business as it pushes the future of television firmly into streaming. Recent studies have shown that as much as 30 percent of all television content is now streamed.

On the content side, Netflix had Q1 successes with the third season flagship show, “House of Cards,” and the Tina Fey produced comedy, “The Unbreakable Kimmy Schmidt.” It’s first entry into a partnership with “Daredevil” (Disney/Marvel) launched to exceptionally good reviews and quickly became second only to “Game of Thrones” as the most pirated show on the web. Late June will mark the role out of the “network’s” other tent pole show, “Orange is the New Black,” which is just beginning to ramp up the media blitz.

House of Cards

In this flurry of positive numbers, there is still one figure that Netflix keeps close to its vest: How many people are actually watching its most buzzed about shows?

There is simply no way that Netflix does not have these numbers. Newspapers and magazines rely on audits to and other hard data to prove to advertisers that people are reading their publications; broadcasters know minute by minute how a TV show is performing; Internet companies rely on analytics to determine the performance of their digital properties and as such are able to tell even the briefest of interactions with their websites.

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Netflix knows how many people watched “House of Cards,” how many episodes in a row they watched, when they paused to go to the bathroom, and when they switched to “The Real House Wives of Beverly Hills”…no matter what they told their friends. Netflix has these numbers, but they’re under no obligation to release them.

Beginning this summer, Nielsen, the company that measures and rates television viewership, will begin offering data on Netflix (as well as other streaming services), but this will still have limitations.

Orange is the New Black

First, they will not be able to track viewership on mobile platforms like phones and tablets. As website traffic increasingly becomes mobile, this will surely exclude a large portion of viewer data.

More importantly, Nielsen has itself said that it is not really in the business of tracking Netflix viewer behavior and they aren’t concerned with the performance of Netflix original content. The primary purpose of the Nielsen tracking service is that other content networks can track the performance of their back catalog and ultimately decide if they can sponsor these shows.

They don’t care how many people watch “House of Cards.” They want to tell CBS how many people are watching 5 year old episodes of “Criminal Minds”.

So why doesn’t Netflix want to release their own numbers? Would they not want the bragging rights? Well, one immediate answer would be that whatever the actual viewership of these shows, it is almost certainly less than you think.

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You would be forgiven -- particularly if you live on the East Coast -- if you were under the impression that the entire world was watching HoC. But a large percentage of this perception is fueled by the fact that it is the exact type of show that appeals to entertainment writers and Beltway bloviators. It is unlikely that any individual episode was viewed more than 3 million times during its initial release. That’s about the average rating for an episode of Fox’s Empire. Ten years ago, it would have been considered abysmal ratings, but the bar has moved.

Netflix would prefer to allow viewers to think of them as Oz, The Great and Powerful, rather than showing the man behind the curtain. But certain revelations in the leaked Sony emails also point to a slightly darker motivation.

A former Sony executive reported a meeting with Netflix in which he was alarmed by their blasé attitude towards international piracy. With a minimum of work, international hackers (and I use that word loosely) were able to access content via Netflix that was intended to be blocked in that region. Netflix’s response was basically a shrug. Subscribers are subscribers, who cares what they watch? And if those subscribers were accessing additional content without permission, Netflix is more than happy to turn a blind eye as long as they make their numbers.

At the end of the day, we may never know the actual ratings on any of these shows. It may not even matter. What is clear, is that Netflix has the spotlight and they don’t intend to let it go.

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