Netflix: Very Few Gamed Free Trials to Watch House of Cards
Netflix just posted their Q1 2013 earnings – $1.02 billion total revenue, slightly beating expectations. They also added 3 million streaming customers, bringing the total to 36 million.
Inside the letter to investors, CEO Reed Hastings and CFO David Wells talk Netflix’s push toward original content – spearheaded by the Kevin Spacey-helmed David Fincher-produced political thriller House of Cards. And they drop a pretty interesting bit of data into that discussion:
People who signed up for Netflix this quarter stayed with Netflix. In other words, Netflix saw very little “free-trial gaming” in order to, let’s say, binge on House of Cards and then cancel the subscription shortly after.
Some investors worried that the House of Cards fans would take advantage of our free trial, watch the show, and then cancel. However, there was very little free-trial gaming – less than 8,000 people did this – out of millions of free trials in the quarter.
Netflix has stated in the past that they will not release viewing data on their original series. So, while we don’t really know exactly how successful House of Cards was for Netflix (in terms of the viewership stats), we know that it was a pretty big success by many other metrics.
A recent survey suggested that around 10% of Netflix’s total subscriber base had watched at least one episode of House of Cards in its first couple of weeks of availability. That survey also found that 86% of subscribers said that they were less likely to cancel their subscription after watching House of Cards. That last figure echoes what Netflix is revealing today – that House of Cards drew people in, and once they were hooked, they decided to stay around.
And really, that’s the goal. Netflix has put a lot of money into the new slate of original series, which includes the just released Hemlock Grove, and the upcoming 4th season of Arrested Development.
“As we’ve said before, our first slate of Originals will represent a small percentage of both our content budget (i.e. P&L expense) and total viewing hours this year, though cash use is front loaded relative to the P&L expense. Long term, we believe the value of our Original series in driving acquisition and retention improvements will be borne out as we add more seasons of already popular shows like House of Cards and further series. Harry Potter was not a phenomenon in book one, compared to later books in the series.”