Alan Wurtzel, head of NBC Universal’s research team, suggested yesterday that broadcast networks need not worry about Netflix, considering “Jessica Jones”, the latest Netflix original show, had only 4.8 million average viewers per episode. Even if this is true, it’s important to note that the absolute number of viewer should matter less for Netflix. Why? And what then should Netflix be looking at? The answer is: Revenue per month per episode. Let me explain. Let’s assume I really like “Jessica Jones” (JJ) and other superhero-type TV Shows. So, I pay Netflix $9/month and watch an episode every week (and that’s all I do). In this, intentionally exaggerated and hypothetical, scenario — I am paying Netflix ~$2.25/episode. If 4.8 million people are doing exactly this — Netflix can reasonably account that it’s revenue from each JJ episode is $10.8M ($2.25*4.8 million). Significantly more than $3.33M it cost them to make it (based on this story). This also impli...
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