How Is Your Binge-Watching Bad for Netflix?
Netflix (NASDAQ:NFLX) has made the practice of binge-watching popular, with users of the streaming TV service able to watch endless seasons of their favorite shows with no interruptions, but according to a report from Variety, binge-watching could have a negative effect on the company’s bottom line.
Variety analyzed a small disclosure in Netflix’s second-quarter earnings report, which said, “We are in the early stages of original content, and continue to monitor whether the viewing pattern is higher than initially expected in the first few months to suggest that we amortize at a faster initial rate.”
This basically means that Netflix may have to reevaluate its practice of releasing entire seasons of original shows like House of Cards and Orange is the New Black all at once. The company spends huge amounts producing the original content — it’s been estimated Orange is the New Black cost $52 million for the first season — that viewers can then watch in huge chunks rather than one episode per week like traditional television shows. Netflix’s original shows get all their viewership and therefore make all their money within a couple of weeks of their release.