Digital Media

Sorry, Netflix -- you need to churn out hit shows too

Netflix loves to flout traditional TV norms. But its latest results show that without buzzy series, we won't subscribe in droves.

Courtesy of Netflix

Not even Netflix can break all the rules.

After a months-long stretch light on buzzy shows, Netflix's subscriber growth came up short in the first three months of the year, according to its first-quarter report (PDF) released Monday.

Netflix has often said it doesn't need all its programs to be home runs to rack up subscribers. Instead, it's aiming for a steady stream of "singles" and "doubles," meaning new originals almost every week that -- combined -- stoke fans to sign up and stick around. But that strategy began to feel passé as competitors, such as Amazon and Hulu, intensified their own originals.

Netflix may need to revisit its playbook: Based on these results, the video streaming giant still needs to blow it out of the park to get your attention.

None of Netflix's releases in the latest quarter seemed to fire up excitement on the level of its "Stranger Things" or "Orange Is the New Black." Netflix is flooding us with programming, spending about $6 billion on content this year and aiming to double its lineup of original shows and movies. But its most high-profile releases in the first three months of the year included "Iron Fist," "Santa Clarita Diet," and an elaborate experiment with a multinational reality-style series, "Ultimate Beastmaster."

If none of those had you compulsively binge-watching into the wee hours of the morning, you're not alone. Analysts at Baird Equity Research pointed to the absence of a "strong universal new hit" when their quarterly survey of US subscribers indicated people were ho-hum about signing up for Netflix in the period.

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According to an outside measurement, Netflix's "Fuller House" last year was so widely watched, it could have beaten ratings giant "The Walking Dead."

Michael Yarish/Netflix

A tough comparison didn't help. A year ago, you couldn't help but to flock to "Fuller House" and cultural obsession "Making a Murderer." The period also had new seasons of "House of Cards" and "Daredevil."

Netflix jealously guards data about viewership, and so it's the only one that truly knows how well watched any given show was. But Symphony Advanced Media, a company that claims it can extrapolate viewership ratings for Netflix, has said that "Fuller House" and "Making a Murderer" were Netflix's two most-watched shows last season. According to Symphony's math, "Fuller House" was so popular it could've beat the "The Walking Dead" in the ratings. (Netflix has characterized Symphony as an inaccurate gauge of audience.)

Without a smash, US subscribers rose to 50.85 million, short of the 50.93 million Netflix predicted in January. Its members abroad increased to 47.89 million, less than the 48.07 million it had anticipated.

In a letter to shareholders Monday, Netflix even made a rare admission about having a flop, an original follow-up to "Crouching Tiger, Hidden Dragon." The company said it considers an original movie a success if it "attracts and delights" members at less of a cost than just licensing others' movies. "Some of our early movies have been successful by this measure," the company said. "Others, such as 'Crouching Tiger Hidden Dragon: Sword of Destiny,' have not. "

But it downplayed the effect of content timing. It said quarter-to-quarter variance in subscribers like that is "mostly just noise in the long-term growth trend and adoption of internet TV."

It was also mostly addressing its decision to move some high-profile shows like "House of Cards" to premiere in a different period, rather than outright addressing the popularity (or lack thereof) of its debut material this quarter.

Looking ahead, Netflix expects to add 600,000 streaming members in the US and 2.6 million internationally in the current quarter, which was better than what analysts' were expecting.

Overall, Netflix reported a profit of $178.2 million, or 40 cents a share, compared with $27.7 million, or 6 cents a share, a year earlier. Revenue rose 35 percent to $2.64 billion.

Analysts on average expected per-share profit of 37 cents -- matching Netflix's guidance -- and $2.64 billion in revenue.

Netflix's stock tends to be one that swings widely on earnings, but this time, investors seemed ambivalent to the mixed results. Shares fell about 1 percent to $145.80 in after-hour trading. Before the results, the stock had risen 56 percent in the last year.

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