Hopefully, Sunday night provides Netflix with perspective. Hopefully it kicks Hastings' bravado down several notches. Maybe he will realize the inanity of his ways. He made nothing short of a bonehead move when he set up comparisons to HBO.
By situating HBO as the benchmark -- in quite arrogant fashion -- he created an impossible task. Nothing short of dazzlement can be quite good enough for Netflix. Yes, with the Emmys, but, more importantly with what actually matters -- viewership.
As the media fawns over Netflix and overhypes "the changing television industry," it fails to press Hastings for answers to the most crucial question: How many subscribers watch your original programming? Because if we're to believe this strategy can retain current subscribers and attract a considerable number of new ones, it's imperative to know how many folks watch.
But Netflix will not tell us. And, if my sense about how things work over there is as spot on as it has been for the last two to three years, I know why.It's not because the numbers are all that bad. It's because whatever they are, they will look bad against HBO. And that's Reed Hastings and his linemate Ted Sarandos's fault. They made a rookie mistake. If, for instance, two million unique subscribers watched an episode of House of Cards, I would, all things being equal, consider that pretty solid, particularly for an upstart original programmer attempting to execute a model different than and inferior to HBO's. But all things are not equal. Nor are they digital. A big Emmy award winner for HBO -- VEEP -- only does about 4-5 million subscribers. Same goes for Girls. If House of Cards comes in at less than that, let alone something like half, it looks really bad when you consider the dichotomy Hastings and Sarandos have created. And it looks downright awful against the numbers shows such as True Blood and Game of Thrones (10 million-plus subs) put up. Netflix should have situated HBO as its big brother. It should have positioned itself as being the company HBO executives call when they decide to pass on a show, but think it's still worthy to see the light of day.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts