How does Netflix measure a hit?
For broadcast TV, hits are essential: they grab a lot of eyeballs, then pass that attention to advertisers, who then give broadcasters more money to run more ads. But a subscriber-based “broadcaster” like Netflix doesn’t need to measure its hits in the same way, since revenues come directly from viewers, not from Chevy or Coke or Taco Bell. How does it measure the success of its award-winning, critically acclaimed show House of Cards? Netflix paid US$100 million for two seasons, and instead of using ad dollars to pay for it, the company needs word-of-mouth, good reviews and overall buzz to convince new viewers to pay $7.99 a month for its streaming service. To break even, it needed to get 520,834 people to sign up for two years. More than 1.2 million signed up in the second quarter alone this year (House of Cards launched in February) and analysts projected another 1.1 million in Q3. Which sounds a lot like a hit, regardless of whether those viewers are streaming House of Cards or My Little Pony.