Seeking Alpha

Netflix (NFLX) renews Orange is the New Black for a second season to be aired in 2014. The...

Netflix (NFLX) renews Orange is the New Black for a second season to be aired in 2014. The comedic drama debuts next week with 13 episodes slated to be released.
Comments (26)
  • This must have reviewed really well to be renewed before season 1 airs. Hopefully another House of Cards type success.
    28 Jun 2013, 08:19 AM Reply Like
  • Gary J: We are both Netflix fans, but what is Netflix paying for this series?
    28 Jun 2013, 09:25 AM Reply Like
  • Although I did not see a figure for this one show, today's Bloomberg article quoted Sarandos as saying that 5% of the Netflix content budget is now going to original programing--but that they aim to increase that to as much as 15% of their content budget in the future.


    Maybe we will have to live with 5%. I think that 15% would be too high.
    28 Jun 2013, 09:52 AM Reply Like
  • I don't know about "too high" - I put my faith in the judgement of the Netflix management team.


    What I do know is that after the subscription signup promo for House of Cards only 8% of those subscribers subsequently cancelled. You do not need many success stories of that magnitude to make up for other original content attempts that do not turn out as well. So I would just as soon see them try for some more hits. And don't forget House of Cards season 2 is coming.
    28 Jun 2013, 10:19 AM Reply Like
  • To answer the question about cost, Orange's budget was reportedly just under $4M per one-hour episode (, making a two-season commitment to 26 shows a $100M+ exposure. $100M for 26 program hours. For context, the Viacom deal NFLX allowed to slip into AMZN's hands (presumably justified by shifting priority to originals) provided about 2,000 hrs of programming for $200M in licensing costs--about $100k per program hour. Maybe the period of exclusivity is longer for NFLX originals and maybe ownership is more meaningful (though as we've seen with House of Cards, exclusivity and ownership added up to a four-month first-run window). But in rough-justice-math terms, NFLX originals are increasing program cost per hour by almost 40x. How is this sustainable for a business with razor-thin margins and negative cash flow?
    28 Jun 2013, 11:38 AM Reply Like
  • According to Netflix's blog (, they did not produce, nor do they own House of Cards.


    Here's an excerpt:
    “House of Cards” is unique, as it is the first exclusive TV series to originate on Netflix...“House of Cards” represents a slightly more risky approach; while we aren’t producing the show and don’t own it, we are agreeing to license it before it is successfully produced.
    28 Jun 2013, 01:55 PM Reply Like
  • Exactly, NFLX doesn't actually own their one big hit and may not actually "own" other "original" programs they claim as their own; this contrasts with HBO, for example, which does fully own most of their originals. NFLX is spending a fortune on exclusive TV rights within a specific window. Their major competitor AMZN, and every other DVD distributor, now has House of Cards available.
    28 Jun 2013, 02:35 PM Reply Like
  • You are correct; other companies are actually producing some of the original content that is showing up on Netflix , see: -
    "Orange is the New Black is being produced by Jenji Kohan of Weeds fame...Hemlock Grove...produced by Gaumont International Television."
    28 Jun 2013, 03:02 PM Reply Like
  • So...checked with industry sources. NFLX assumed nearly all of the costs of HoC despite lack of real ownership, and their inexperience in show production led to exposure in the cost overruns, where Fincher et al pushed budget to $4.5M+ per episode, so they ate almost all of the $120M+ for two seasons for their limited rights. Sounds like they are in nearly the same position in terms of budget percentage exposure with Hemlock and AD4, and somewhat better for Orange (75%?), which is more of a co-production with Lions Gate, hence their enthusiastic pre-debut renewal. NFLX is taking the market for a ride as they fulfill their fantasy of playing Hollywood producers.
    28 Jun 2013, 08:51 PM Reply Like
  • NFLX renewed Hemlock Grove for a second season after it got terrible reviews and audience interest plummeted post-debut (~90% Google trends decline within a month). Renewal prior to debut of Orange is the New Black only indicates that NFLX is plowing ahead with the most expensive original program development in the industry, a move that has so far produced only one success. Investors only need to remember that NFLX was running victory laps on Arrested Development before it debuted, and we all saw how that turned out.
    28 Jun 2013, 09:56 AM Reply Like
  • To Digital Media: Please remember that with the streaming model of Netflix, we are thankfully seeing the end of tightly scheduled linear television and its replacement with watching what you want, when you want--and this can work a number of ways.


    For some, it means "binge-watching," seeing a very large number of a program's episodes within a short period of time. For others, it may mean the opposite. We may not watch something right away, after all, it will still be on the site many months or years from now.


    I might fall into the latter group on some shows. I have not watched any of the new Arrested Development episodes, but I instead am getting into the series by starting with the old 2003 episodes. It sounds like you are rooting for there to be no programming for me to stream from Netflix before I can even get to the 2013 episodes!
    28 Jun 2013, 10:15 AM Reply Like
  • Netflix doesn't care if you watch the show today, tomorrow, or 2 years from now. They don't have advertisers, they don't get more money the sooner you watch it. So if they think the show is good then they should renew it.
    28 Jun 2013, 10:27 AM Reply Like
  • Subscriber acquisition and retention--which NFLX does depend on--driven by an original content strategy does require that people care about these new shows month-to-month because they subscribe and churn month-to-month, not in two-year intervals. NFLX has no magic formula for ridding itself of the consequences of costly original program failures.
    28 Jun 2013, 10:58 AM Reply Like
  • They already paid for the show for the 4 year exclusive. So it makes no difference if 1 million people watch it today, and 3 million people watch it over 4 years, or if the reverse happens.
    28 Jun 2013, 08:40 PM Reply Like
  • WHY is NETFLIX associating itself with a segment of the sports industry that supports and shills for MURDERERS AND GENERAL MALCONTENTS ????


    June 26, 2013 8:00 pm


    A list of major NFL player arrests


    By Staff The Associated Press

    28 Jun 2013, 10:23 AM Reply Like
  • To Kathleen: I am not a football fan myself--and I can say that, as a fan of movies and TV shows who happens to use Netflix for the majority of the household programming, I am not really doing much to financially support the football culture. No, it is the cable and satellite subscribers who pump lots of money into the football coffers.


    Netflix, in fact, is often criticized on this site because it lacks significant sports programming. A few days ago, the most I could suggest to a frustrated basketball fan using Netflix was that some old games are on DVD.


    Netflix is much closer to your side on this issue compared to its cable and satellite rivals!
    28 Jun 2013, 10:46 AM Reply Like
  • Huh? I don't see anything about Netflix in that story.


    Anyway, Sakelaris what is that cool bird in your pic?
    28 Jun 2013, 12:50 PM Reply Like
  • Gary, I really could not see that Netflix was associated with football in any significant way, but I thought her comment deserved a polite reply.


    The bird is the Golden-Winged Warbler. I saw one in the early 1980s. Now it is becoming rare.
    28 Jun 2013, 01:00 PM Reply Like
  • Be careful with Netflix it can bring some pain and fast.
    30 Jun 2013, 03:03 PM Reply Like
  • Mixed to positive reviews for Orange is the New Black debuting today, with a few thumbs decidedly down. Looks like a Weeds-level success, which was, after all, just one initially entertaining and then tediously meandering show among a whole slate of generally decent programming on Showtime. Google Trends suggest nowhere near the interest level is building for ‘Orange’ compared with the other three new NFLX series this year ( Is all this enough to sustain sky high expectations for NFLX original content strategy? How can NFLX be the new HBO when their programs struggle to achieve the old Showtime standards?


    Newsday: Orange is the new ‘blah’
    NYT: “Orange” may be a roughly hourlong show, but it has the soul of a sitcom or a teen drama — it’s more “Gossip Girl” than “Oz” — and situations tend to resolve themselves through slightly over-the-top humor and an increasingly prevalent sentimentality.
    Variety: Netflix women-in-prison series from Jenji Kohan is more 'Weeds' than 'Oz' - in mostly good way
    People Weekly: An irritating comedy-drama (paywall)
    11 Jul 2013, 11:22 AM Reply Like
  • To Digital Media: Of course, another way of commenting on a new series is to actually WATCH some of it and THEN comment! Here is my impression of the first episode:


    In terms of being fast-moving with an interesting array of characters, this show seems to be effective. The first episode makes a good use of flashbacks. It also raises some interesting political points. As a now very minor investor in Netflix, I do not mind saying that it could have a lot of appeal. True, I always worry about whether Netflix paid too much for it and the other new series this year, but since the money is spent, why not have something that will encourage viewers?


    All of this comes with a big warning however; this is an extremely trashy show. Almost everyone has a potty mouth and numerous sexual situations are portrayed, often on-screen.


    Yes, it is trashy--and yet factor that also makes me pull out my seventh-grade copy of Mark Twain's Huckleberry Finn, in which a man advertises a traveling show with a supposed warning: LADIES AND CHILDREN NOT ADMITTED. He then remarked, "If that line don't fetch them, I don't know Arkansaw!"
    11 Jul 2013, 09:39 PM Reply Like
  • I defer to your focus group of one. It's a great paradigm for a marketplace.
    12 Jul 2013, 12:13 AM Reply Like
  • "To Digital Media: Of course, another way of commenting on a new series is to actually WATCH some of it and THEN comment!"


    LOL Hey nice review!


    He has a bet against Netflix and a negative view. Any review of the series would be, wait for it - negative!
    12 Jul 2013, 07:32 AM Reply Like
  • And I defer to your complete objectivity! Less deferential to your reading comprehension since my comment began with "Mixed to positive reviews for Orange is the New Black debuting today, with a few thumbs decidedly down" (a statement for which I provided factual references, realizing that factual references can be such a nuisance for momentum stocks)...
    13 Jul 2013, 03:42 PM Reply Like
  • From the Washington Post -


    "“Orange Is the New Black” feels like Netflix’s first real home run since it famously entered the scripted-series biz. I realize some people couldn’t get enough of the contorted “House of Cards” this year, and that the “Arrested Development” niche is still dizzy from their group binge in May, but “Orange” is the first series in which I’d almost insist that viewers upgrade to streaming service and come along for television’s seemingly inevitable future delivery method."

    12 Jul 2013, 10:08 AM Reply Like
  • I just saw the second episode of "Orange is the New Black." Several story lines are at work by now, with flashbacks still being used a lot to help explain some back story. The show is cleverly written.

  it fun? Although I am already on record as a Netflix fan, I must admit that this series is no longer fun for me to watch. It was really depressing in many ways. I am hopeful that many other folks will like it, but it is just not for me.


    I am more likely to continue to watch and enjoy "Arrested Development." So far, I have seen the first 14 episodes of the first season of "Arrested Development," and I hope that series will continue.
    14 Jul 2013, 12:27 AM Reply Like
DJIA (DIA) S&P 500 (SPY)