'Arrested Development' fuels Netflix subscriber growth

July 22, 2013|By Dawn C. Chmielewski
  • Netflix's production of a new season of "Arrested Development" helped fuel an increase in the company's subscribers. Above, "Arrested Development" cast members Will Arnett, left, and Jason Bateman.
Netflix's production of a new season of "Arrested Development"… (Michael Yarish / Associated…)

Netflix Inc.'s investment in original content continues to pay dividends for the movie and TV subscription service.

The new season of the quirky situation comedy "Arrested Development" helped attract more viewers to Netflix, pushing the number of domestic subscribers to nearly 30 million. The show, with its passionate fan base, helped generate a "small but noticeable bump" in paying customers after it debuted in May, returning for a fourth season after being off the air since 2006.

"Other great shows don't have that noticeable effect in their first season because they are less established," Netflix Chief Executive Reed Hastings said in a note to investors accompanying the company's second quarter earnings.

For the second quarter, which ended June 30, Netflix reported a net income of $29.5 million, or 49 cents a share, nearly quintuple its profit in the second quarter of 2012, when the company posted a net income of $6.2 million, or 11 cents a share. Revenue shot up to $1.1 billion, up 20% from a year ago.

The subscriber gains were reported less than a week after Netflix collected 14 Emmy Award nominations for its original programs, including a drama-series nod to "House of Cards," and a comedy-series lead actor nomination to Jason Bateman for "Arrested Development."

After years of licensing movies and TV shows, Netflix embarked on a strategy of producing original shows to help differentiate the service from rivals such as and Hulu.  It launched five series -- "Lilyhammer," "House of Cards," "Hemlock Grove," "Arrested Development Season 4" and "Orange Is the New Black." 

Later this month, it will premiere "Mako Mermaids," a series aimed at teen viewers. Also coming this year are a new series from Ricky Gervais, "Derek," and "Turbo: F.A.S.T. (Fast Action Stunt Team)," an original series from DreamWorks Animation.

Hastings said Netflix will expand its original-content initiative to include documentaries and stand-up comedy specials.

"Netflix has become a big destination for fans of these much-loved and often under-distributed genres," Hastings said in his note. "We'll continue to build on our initial success with Originals as we gain confidence in our ability to use our judgment and data to find projects that our members will enjoy."

Netflix projected net income of $18 million to $34 million for the third quarter, with earnings at 30 to 56 cents a share.


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