Netflix Has Almost Already Paid for 'House of Cards' in New Subscribers
By adding more than 2 million U.S. subscribers this quarter and another 1 million elsewhere in the world, Netflix has nearly earned back its entire $100 million investment in House of Cards — in under three months. As we explained in our breakdown of the economics of that original show, Netflix only needed about 520,834 new users — in two years — to break even on that program. But the streaming and delivery businesses have added nearly $50 million in subscriber dollars in this country alone, Netflix announced in its earnings report Monday. If you include the overseas users, that number goes up to about $72 million.
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Of course, not all of these new (paying) customers will stick around for two years — and Netflix has other costs besides its high-profile leap into original programming, including Hemlock Grove, which premiered this weekend, and the comeback of Arrested Development, which is expected to offer another subscriber boost when it debuts Memorial Day weekend. But CEO Reid Hastings said in his letter to investors Monday that fewer than 8,000 new users participated in "free-trial gaming — that is, hardly anyone signed up, binged-watched House of Cards, then quit Netflix. If the company keeps building loyal subscribers at this rate into 2014, when it premieres a new series from the Wachowskis, Netflix should be able to break even on all of its original programming — by our calculations, that would take 2.6 million new paying subscribers a month every per year — and then some.
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In other good news for Netflix, the streaming service has inched passed HBO's U.S. fanbase, with 29.17 million to HBO's 28.7 million subscribers, according to SNL Kagan Data. That could have something to do with the incredible barrier to entry that comes with an HBO subscription. Perhaps this will motivate HBO to offer a standalone service for cord-cutters... although that's probably extremely wishful thinking.
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