What do Netflix Subscribers Stand to Gain Without Ratings?

Netflix has been in the news in the past week because their broadband speeds have been noticeably slowed for viewers on networks like Comcast and Verizon.

Now it seems that Netflix will not comment to anyone in the press on what is happening, but the company did for whatever reason feel free to tell J.P. Morgan analyst Doug Anmuth privately that Verizon is not throttling Netflix streams:

Reed Hastings, Netflix“J.P. Morgan analyst Doug Anmuth…says he has been talking to Netflix CEO Reed Hastings and CFO David Wells, and they told him they don’t think cable and telco companies are hampering the company’s video streams. Anmuth doesn’t have much to report on the topic, so here are his comments in their entirety: “Netflix does not seem overly concerned regarding Net Neutrality, and continues to believe that violations would be escalated quickly. Netflix also indicated that it has no evidence or belief that its service is being throttled.”

While their name was floating around in the press, with public outcry over who is to blame for slow broadband speeds, Netflix released the second season of their Emmy award winning show House of Cards in its entirety. HOCs2_Poster

According to Procera networks, a company that provides Internet traffic management for broadband providers announced the success of the show over the weekend by saying that 16% of Netflix subscribers, roughly 6,400,00 different devices checked in on Valentines Day to watch at least one episode of the new season of House of Cards.

With access to every subscribers personal preference, Netflix has more information on analytics then any other television provider because they are collecting it themselves. While other television channels are left relying on common ratings systems from the network that owns them, Netflix is free to release or say whatever they want.

They are able to do this because their business model relies not in ratings, but in new subscriptions.

In an interview last year between Netflix’s Chief Content Officer Ted Sarandos and interviewer Harvey Weinstein about ratings, Sarandos said “I just think it [ratings expectations] creates a benchmark that is irrelevant to the business but sexy and exciting to write about and puts a lot of performance pressure on shows that otherwise will be great shows over time and you try to do things to manipulate.

It’s probably in the best interest of the viewers if ratings are not released because ratings put too much pressure on shows to succeed. Everyone has that one show that they wish never got canceled or got one more season. Netflix may renew hope for the viewer with their new original content and the possibility of no more early cancelations.

Their mindset seems to be that if enough new people are subscribing to Netflix, they are happy to stream original content for that one extra season.

However, Netflix is still in the early stages of producing original content. It is unclear what they will do when more shows are added and what they will do when one show lacks support from a large audience because both of their original shows Orange is the New Black and House of Cards are so wildly successful.

Only time will tell if the company will really give their original television shows with poor ratings that extra season.

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