What "Orange Is the New Black" Reveals About Netflix's Programming Strategy

Three Fools take to the Internet to discuss why "Orange Is the New Black" is so important to the streaming sensation.

Jun 11, 2014 at 6:12PM

Season two of Orange Is the New Black is already here, and season three is on the way. Netflix (NASDAQ:NFLX) ordered the follow-up in early May, a month before the new season debuted here in the U.S. Why didn't Netflix's chief content officer wait to see how viewers responded to the new episodes? What makes this show so special that Netflix had to have more?

Guest host Alison Southwick puts these questions to Fool analysts Nathan Alderman and Tim Beyers in this episode of 1-Up On Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite movies, toys, video games, comics, and more.

Tim says that Orange Is the New Black wouldn't have worked on a broadcast network because it doesn't have the mass appeal advertisers crave. Instead, Netflix is cultivating a small but passionate following in hopes that word will spread and lead others to subscribe. (The strategy seems to be at least partially working: Illegal downloads jumped tenfold following the season two debut.)

Orange Is The New Black June

Orange Is the New Black will be back for a third season on Netflix. Source: Netflix.

Positive buzz for Orange Is the New Black and similar originals is even more important abroad, where Netflix is rapidly expanding. Good reviews, awards, and positive word of mouth are necessary to convince would-be members that Netflix's library is worth paying for. Sarandos is apparently paying close to $4 million per episode to make sure they see Orange Is the New Black meets their standards.

Nathan agrees, saying the show doesn't pretend to appeal to a wide audience. And yet Netflix can do that because its overall library does appeal to wide audiences, allowing the company to take risks with original programming such as Orange Is the New Black as well as House of Cards and Hemlock Grove.

The strategy has paid off nicely. Netflix's worldwide streaming membership has grown from 26.48 million in the first quarter of 2012, when Lilyhammer debuted, to 48.35 million in the most recent quarter. Almost a clean double, and decent circumstantial evidence that Sarandos is right to want more stories starring the ladies of Litchfield prison.

Now it's your turn. Click the video to watch as Alison puts Nathan and Tim on the spot, and then leave a comment to let us know your take on Orange Is the New Black and Netflix stock. You can also follow us on Twitter for more segments and regular geek news updates!

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Netflix at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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