AMC Should Thank Netflix for Keeping Walter White Alive

AMC Networks (NASDAQ:AMCX) is waving a very fond farewell to hit series Breaking Bad. The award-winning drama about chemistry teacher/meth kingpin Walter White's descent into ever deeper circles of hell just aired its final episode, leaving investors to wonder how AMC will fill this gaping void in its schedule -- and its ad revenues. Will Mad Men and The Walking Dead be able to wear Walter's crowd-pleasing crown?

But before cooking up the next hit drama, AMC should send a fruit basket to Netflix (NASDAQ:NFLX). Without the streaming video pioneer's audience-boosting influence, Breaking Bad might never have made it to the epic final season.

Walter White lingers over the all-too-familiar cooking equipment one last time. Image source: AMC.

Just ask Breaking Bad cinematographer Michael Slovis. In an interview with Forbes contributor Allen St. John, the wizard of dramatic desert vistas explained how Netflix and DVR boxes saved Breaking Bad 's bacon. And in the process, he also tipped Netflix's closely guarded hand on viewership numbers.

"Another hardware development that helped us tremendously is that all of a sudden you could DVR and Netflix the show," he said. "I don't know the numbers, but there was a period of time where Netflix was proud of the fact that more people had seen Breaking Bad on Netflix than on AMC. [Emphasis mine.] We build an audience because they're able to binge view and catch up." 

If Netflix crowed about this fact in public, I must have missed it. This is news to me, a glimpse of what insiders hear behind closed doors.

The first three seasons of Breaking Bad bowed to Netflix viewers about two years ago. At the time, the show was a minor success with steady viewership somewhere around 1.5 million to 2 million pairs of eyeballs per episode. That's not enough to ensure a series' survival: AMC recently canceled The Killing, which received similar ratings in its final season. Keep in mind that AMC has 99 million paying cable subscribers, so 2 million viewers isn't a very impressive number.

But Netflix had just 24 million paying subscribers at the time. Eclipsing AMC's Breaking Bad audience with just one-third of AMC's potential audience sounds like a game changer. If nothing else, it shows that Netflix viewers can commit to a new show in new and exciting ways.

I wish I had some way of correlating this Breaking Bad insight with Netflix's in-house productions, such as House of Cards or Orange Is the New Black. The closest thing to publicly available Netflix viewership data is the number of customer ratings posted, which shakes out like this:

Data grabbed from Netflix on Oct. 1, 2013.

So Netflix can sustain a Breaking Bad audience of at least 2 million viewers per episode, according to Slovis' comment. Each of the company's original series, perhaps excluding Lilyhammer, seems to play in the same league.

I would argue that Breaking Bad has been very good to both AMC and Netflix. The current crop of original programming seems poised to make a similar impact on subscriber figures, while AMC goes looking for fresh content.