Netflix hit 'Stranger Things' could turn around flagging subscriber numbers

Netflix's Beverly Hills office (Source: Netflix)

Netflix has potentially struck gold in an unlikely spot: its new thriller Stranger Things is a word-of-mouth hit and “the biggest TV series to debut this year, and it’s not close,” according to a Pacific Crest analysis, which added the series is one of the most-searched for shows in the SVOD provider’s history.

It’s good news for the streaming service, coming on the heels of a disappointing second quarter which saw new subscribers fall well below its forecasts. Netflix had expected to sign up a half-million U.S. viewers and 2 million internationally, but only saw 160,000 and 1.2 million new subs, respectively.

The series’ appeal may be its cross-genre status -- a supernatural thriller that simultaneously evokes strong nostalgia for a bygone decade as well as some of the biggest sci-fi hits of that era. Stranger Things has drawn a global audience, suggesting that in terms of original content, Netflix may be finding its niche.

Of course, Emmy favorite House of Cards is also a series that appeals to viewers worldwide, perhaps owing to its roots in the original BBC series developed by creator Andrew Davies and Michael Dobbs, who hold executive producer credits on the U.S. version.

In either case, the ability to binge on the entire season rather than wait for the next episode in a week may continue to draw new subscribers.

“We believe the performance of 'Stranger Things' highlights the efficiency of Netflix's model as a broad distribution platform and the dynamic nature of the service over time, both of which help Netflix efficiently address the challenge of consumers' unique and broad tastes,” said Pacific Crest analyst Andy Hargreaves, according to Investors Business Daily.

But the popularity of this latest series is also likely a result of the amount of money Netflix has dedicated to original content -- $6 billion, with a higher budget earmarked for 2017 and beyond.

Netflix’s stocks fell after its second-quarter earnings report, indicating many investors were losing faith in its ability to sustain growth. But some analysts remain bullish on the provider, and see the downturn in subscribers – due partly to a broad price rise as older customers came off of grandfathered prices – as a temporary hiccup.

Credit Suisse, for example, said in a note to investors that the subscriber churn is temporary, and “demand for Netflix’s services remains robust,” according to a Financial Review article.

Outside the U.S., Netflix has some licensed content aces up its sleeve as well. The provider signed a deal with CBS to stream its new Star Trek series to international viewers, and Canadians are already streaming Star Wars: The Force Awakens two months ahead of its planned debut in the States. Those popular properties could result in a subscriber windfall for the service in the second half of the year.

For more:
- see this Business Insider article
- see this Investors Business Daily article
- see this Financial Review article

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