Netflix Recovers From Miscues, Continues To Dominate

By James DeRuvo (doddleNEWS)

If you’ve ever struggled with a slow internet connection at around 6pm or later in the evening, you’ve suffered from what I like to call ‘the Netflix effect.’ That’s when people who have “cut the cable,” get home from work and fire up their Roku Box, Apple TV, or game platform and started streaming Netflix. It’s become so prevalent, that the DVD by mail-turned-streaming video service celebrated over 1 BILLION hours of streaming in June of 2012. WOW.

“Netflix monthly viewing exceeded 1 billion hours for the first time ever in June,” CEO Reed Hastings proudly stated. “When House of Cards and Arrested Development debut, we’ll blow these records away.”

The news is so good for Netflix, that their stock is on the rise.  Last week, NFLX rose to a high of $81.89 a share, dipped slightly, and then continued it’s rise.  Today, it closed at $83.40, a change of 1.54%.  Analysts at Citigroup continue to be bullish on Netflix, saying that shares are certain to rise to $130 a share and advising solid buys. The results are a dramatic change from the Spring, when Forbes said that investors were cagey about Netflix, which posted their first loss in seven years due to a series of miscues that included splitting their DVD by mail business and focusing exclusively on streaming.  Charging users for both services separately caused a lot of viewers to jump ship in favor of rivals like Hulu, Amazon Prime, and YouTube.  But lately, things are on the uptick as Netflix has reported adding over 2 million subscribers since the beginning of the year.

And now, so many viewers are watching Netflix that the streaming service now qualifies as the most watched channel in either broadcast or cable television in the United States, according to analyst Richard Greenfield of BTIG.  Those kind of figures are reasons why Netflix has decided to dive into the deep end of the pool for original programming.  They’re already streaming original episodes of “Lilyhammer,” starring Steven Van Zandt as a mobster who goes into the witness protection program and ends up in Norway, and are ramping up a slate of ala carte originals including House of Cards, the David Fincher-Kevin Spacey project based on a British novel and miniseries; Orange is the New Black, the story of one woman’s time in minimum-security prison, by Weeds creator Jenji Kohan; Hemlock Grove, starring Famke Janssen (GoldenEye, The XMen) and Aaron Douglas (Battlestar Galactica), and the dramatic return of cult favorite Arrested Development, which returns to production over five years after being cancelled by Fox.

What’s the benefit of the ala carte model?  According to Forbes, audiences are tried of paying monthly fees for pay services like HBO and Showtime, who even though have great series’ like Game of Thrones and The Borgias, don’t offer enough for viewers to stick around all month.  They complain their paying for a few great shows,  that can easily be done via subscription through iTunes or through Netflix streaming model.  Lillyhammer, which was released as either a weekly or all at once subscription, proved that viewers will dive into an ala carte model in record numbers.

Will Amazon and Hulu dive into original programming to compete? Amazon is currently creating a kind of “farm system” that will enable anyone to pitch and produce either sitcoms or children’s shows that will be streamed via Amazon’s Prime service.  If executives like the pitch, they’ll pay $55,000 (plus  up to five percent on sales of licensed merchandise, and “other royalties and bonuses,”) to upstarts to fund their own studios.  Hulu, is in the original game as well, with a timely political series called “Battleground,” a reality series called “A Day in the Life,” and a travel series called “Up To Speed” by Richard Linklater, director of “Dazed and Confused” and “Slacker.”

And with the networks busy suing satellite provider DISH Network for their commercial skipping feature, the field seems wide open for Netflix and others to get into the original game and leach some of that audience in the process.

About James DeRuvo

James has a multi-faceted career that spans radio, film and publishing. A writer about the technology in the video industry for nearly 20 years, James is also an award winning film director, having garnered a Telly Award for his short film Searching for Inspiration. He's also worked as a producer of many talk radio programs in Los Angeles with topics ranging from entertainment to travel to technology.

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