Before Netflix launched the political drama, “House of Cards,” CEO Reed Hastings and Chief Financial Officer David Wells didn’t understate their confidence in a letter to shareholders.
“We believe that Feb. 1 will be a defining moment in the development of Internet TV,” Hastings and Wells wrote in the letter. To that end, Hastings and Wells appear to have been correct since, according to a recent survey conducted by investment firm Cowen & Co., 86% of Netflix subscribers indicated they are less likely to cancel their membership due to “House of Cards.”
On Feb. 1 Netflix released all 13 episodes of “House of Cards” in all of its markets, allowing members the freedom to watch the show – which stars Kevin Spacey and Robin Wright – at their convenience. Spacey plays Frank Underwood, a Democrat from South Carolina’s 5th Congressional District and House Majority Whip. After Underwood is passed over for an appointment to Secretary of State, he decides to exact his revenge on those who betrayed him.
“We believe original series developed for Internet TV will be better for creators, better for consumers, and better for Netflix,” Hastings and Wells added in the letter.
Research shows that 90% of consumers like the idea of releasing all the episodes of a series simultaneously, instead of spacing them out – with some mini-hiatuses – like television networks do.
Loyalty is even more important these days for Netflix following its major gaffe at the end of 2011 when Hastings announced dividing the company into two entities – one for streaming movies over the Internet; and the other, Qwikster, a separate DVD-only business. Also, a proposed monthly price hike from $9.99 to $15.98 did not sit well with customers – so much so that 800,000 members canceled their subscriptions.
Hastings quickly pulled the plug on Qwikster, but not after the membership loss occurred.
In 2012, Netflix added nearly 10 million global streaming members – bringing that total figure to more than 33 million. Hastings spoke to investors last month in San Francisco about the launch of “House of Cards.”
“It's a great start,” he said. “It's phenomenally successful for us."
Hastings said his goal is to triple membership to more than 90 million. Hastings added that Netflix’s original programming has “just begun” but early returns presents "a very nice confirmation of the premise that over the next couple of years we can build something very important."