Season 2 of House of Cards returns this coming week. Yet the big news for Netflix (NFLX -1.85%) isn't the premiere; it's that Chief Content Officer Ted Sarandos has already approved a third season. Do the numbers justify the decision? Host Ellen Bowman puts this question to Fool analysts Nathan Alderman and Tim Beyers in this week's 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 the deal isn't as unique or crazy as it may sound. For example, Starz (STRZA) reupped the pirate drama Black Sails for a second season months before the series premiere, which enjoyed a record open for the network. In paying up now, Tim says Netflix should be able to secure commitments from each of the principal players in the show.
He also points to recent comments from CEO Reed Hastings that at least suggests Netflix is now serving 2 billion hours of programming monthly. Engaging originals such as House of Cards and Orange Is the New Black appears to be driving viewership. Ellen agrees, calling Netflix a "must-have" service that even cheapskates will refuse to unplug.
Nathan also likes the move but says it's one of many steps Netflix needs to take in order to separate itself from rivals. Specifically, investors should be watching to see how Sarandos and team invest from here. Presuming they're able to acquire and develop a portfolio of highly regarded shows that follow in the spirit (if not the form) of House of Cards and Orange Is the New Black, it'll be easier to grow the worldwide membership base and deliver returns to today's shareholders.
Now it's your turn to weigh in. Will you be tuning in to season 2 of House of Cards? Would you buy, sell, or short Netflix stock now? Please watch the video as Ellen puts Tim and Nathan on the spot, and be sure to check back here often for more 1-Up on Wall Street segments.