Since it started creating original content, Netflix (NASDAQ:NFLX) has eschewed the traditional model of releasing a new episode of a show each week. Instead, the streaming company puts all the episodes of a new season online at once.
This makes it possible for what has become known as binge-viewing -- the practice of watching multiple episodes, or even a whole season of a program in a single sitting. It's a phenomenon that has served the company well, and it's also one that may have inadvertently help create some of Netflix's biggest hit.
Because it's possible to watch more than one episode in a sitting, the streaming leader has a better chance of getting people to try more than a single episode. That's important, because new research from the company showed that even the most popular hit shows don't snag most of their audience in the pilot episode.
What did Netflix learn?
The company examined its global streaming data across the first seasons of some of more than two dozen popular shows -- both its own original series and shows that premiered on other networks -- looking for signals that pointed to when viewers became hooked. The company explained in a press release what it was able to learn:
It turns out that when commercial breaks and appointment viewing are stripped away and consumers can watch an entire season as they choose, you can see fandom emerge. That is, 70% of viewers who watched the hooked episode went on to complete season one or more poetically, when members were hooked and there was no turning back.
The most important point was that in all cases, the tipping point wasn't the first episode. That puts traditional TV at a distinct disadvantage when it comes to launching shows. Netflix can get an on-the-fence viewer to watch multiple episodes simply because they're there. Network TV needs a viewer who isn't yet hooked to make a conscious decision to come back.
"Given the precious nature of primetime slots on traditional TV, a series pilot is arguably the most important point in the life of the show," said Ted Sarandos, chief content officer for Netflix. "However, in our research of more than 20 shows across 16 markets, we found that no one was ever hooked on the pilot. This gives us confidence that giving our members all episodes at once is more aligned with how fans are made."
Why does this matter?
In some ways, this doesn't change anything, but it does validate the company's strategy. It also may lead more networks to do what NBC did this summer with Aquarius and make all of the episodes of a new show available all at once online.
The research shows that Netflix has a clear advantage simply by having its shows available in their entirety. That makes it easier not only for the company to hook viewers, but also for show creators to decide how to tell a story.
"There's a unique sense of intimacy with creating a show for Netflix. Knowing you have an audience's undivided attention and that in essence, they are letting these characters in their home, we unfolded storylines at a more natural pace," said Marta Kauffman. "In episode four, we see Grace and Frankie having no choice but to confront their fear, anger and uncertainty head on, which to me as a creator was a nice turning point to shift the narrative to focus on the future instead of the past; it is nice to know viewers were there right along with us."
This is good for Netflix
While the streaming-media leader doesn't release viewership data or "ratings" for its programs, it appears to have a much higher ratio of hits than broadcast networks. This apparent phenomenon happens in part because of its reputation for quality and its lack of need to fill a schedule -- meaning it doesn't have to force a clunker of a show to air just to fill time.
This research shows that Netflix's high batting average for launching shows is also at least partly because releasing all the episodes at once makes it easier to get people to the point where they become hooked. That's an important strategic advantage which allows the company to fail less often which is extremely important when you consider the amount of money it costs to produce a television series.
Daniel Kline has no position in any stocks mentioned. He never binge watches. The Motley Fool owns and recommends 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.