SAN FRANCISCO (AP) — Netflix is hoping this weekend's release of the resurrected TV series "Arrested Development" will draw more subscribers to its Internet video service.
The award-winning show about the dysfunctional Bluth family returns Sunday, seven years after Fox cancelled the series. The revival coincides with Netflix's own resounding comeback from a customer backlash over price increases and shareholders' worries about rising expenses. The adversity had raised doubts about the company's management and future.
Now, Netflix is winning back subscribers and investors with a bold attempt to establish its $8-per-month service as a home entertainment powerhouse that rivals the broadcast television networks and premium cable channels such as HBO.
"Arrested Development," a comedy that won six Emmy awards during a critically acclaimed three-year run, is the third exclusive series from Netflix Inc. this year. It's part of Netflix's effort to add more original programming to a selection that consists primarily of old TV series and movies.
With 29.2 million U.S. subscribers — far more than the 21.9 million TV subscribers that leading cable provider Comcast Corp. has — Netflix has already reshaped home entertainment. Netflix has also expanded to several European countries in recent years.
The service is encouraging more people to forego cable and satellite TV service and rely on Netflix to watch popular TV series a year or more after they originally were shown. Netflix also is empowering viewers to watch an entire season of a TV series in a matter of days instead of months.
Netflix CEO Reed Hastings isn't done disrupting things yet. He is spending more than $2 billion annually, including about $200 million to finance original programming that can be watched on traditional computers, smartphones, tablets, video game consoles and Internet-connected TVs.
By expanding its library of content, Netflix is hoping people will decide to spend their idle time on its Internet video service rather than play video games, fraternize on Facebook, surf cable or satellite TV or watch a DVD. (Netflix started out as a DVD-by-mail rental service, but it is phasing that out in favor of Internet streaming.)
"We want our members to choose Netflix in these moments of truth," Hastings wrote in a recent essay outlining Netflix's philosophy.
By bringing back "Arrested Development" this weekend, Netflix is also trying to prove that people still want to see quality entertainment even when the weather is getting nicer and the days are growing longer. That runs counter to the philosophy of broadcast TV networks, which for decades have typically started the new seasons of their top TV series in September and stopped showing new episodes just before the Memorial Day holiday weekend in the U.S.
BTIG Research analyst Rich Greenfield believes the scarcity of compelling choices on broadcast TV at this time of year is bound to help Netflix draw more viewers to "Arrested Development." In a recent analysis posted on BTIG's blog, Greenfield predicted that the total number of hours watched on Netflix in June might even surpass the Fox broadcast network for the first time.
If that were to happen, it would be an ironic twist, given that Fox canceled "Arrested Development" in 2006 over the protest of the series' fervent fans. "Arrested Development" had low ratings during its run, but the viewers who did watch loved it. Others discovered the show later on DVD or Internet streaming — both of which have been available through Netflix.
The first three seasons of "Arrested Development" were being watched by so many subscribers that Netflix knew another season would be well-received by its existing audience and would likely lure new subscribers, too.
Like Netflix's previous series, all 15 new episodes of "Arrested Development" will be released simultaneously to allow viewers to watch the show as if they were perusing a book and deciding how many chapters to pore through in a single sitting. "Arrested Development" is scheduled to be available at 3:01 a.m. EDT Sunday (0701 GMT), meaning Netflix subscribers could conceivably devour the entire season.
Netflix's departure from TV's traditional one-episode-per-week strategy has been well received by subscribers who have watched the service's previous forays into original programming.
February's release of "House of Cards," a political drama that stars Oscar-winning actor Kevin Spacey, helped Netflix add 2 million more U.S. subscribers during the first three months of the year, more than analysts anticipated. "Hemlock Grove," a quirky horror series, attracted additional viewers during the first weekend after its mid-April release, according to Netflix, although the company hasn't provided specific numbers.
It's difficult to quantify how many subscribers joined Netflix to watch "House of Cards" and then decided to stick with the service after seeing all the other material available. That's because "House of Cards" debuted during a winter period that is traditionally one of the service's prime times. For instance, Netflix added 1.74 million subscribers in the first three months of 2012. The difference between the two years could be an indication that "House of Cards" generated an additional 250,000 subscribers, although there is no way of knowing for sure.
In any case, "Arrested Development" is expected to attract even more new subscribers than "House of Cards" because of its built-in fan base and the success that several of its cast members have enjoyed since the show's cancellation. The original cast, including Jason Bateman, Michael Cera and Will Arnett, is returning to the zany series revolving around a family whose opulent lifestyle was torn apart by the arrest of a corrupt patriarch played by Jeffrey Tambor.
In the new episodes, viewers will get updates on the characters, one by one. Although that was done because of difficulties booking the actors all at once, it ended up allowing for a non-traditional viewing experience, one more fitting on Netflix than a traditional network. Viewers, for instance, will be able to pause an episode on one character to watch the same scene from another character's vantage point.
The long-awaited return of "Arrested Development" prompted Netflix to be more optimistic about subscriber growth during the traditionally sluggish April-to-June period, Hastings told The Associated Press in a recent interview. The California company predicted that it could gain as many 880,000 U.S. Internet streaming subscribers during the second quarter. Without the series, Hastings said, the projected increase probably wouldn't have exceeded 530,000, the growth it had during the same period a year ago.
If "Arrested Development" does as well as Hastings hopes, it will mark another triumph for a company that had fallen out of favor with subscribers and investors less than two years ago. Netflix infuriated customers in July 2011 when it announced price increases of as much as 60 percent for people who wanted to rent DVDs by mail and stream Internet video. Then, Hastings unleashed even more outrage by outlining plans to spin off the DVD-by-mail option into a separate service called Qwikster.
Netflix didn't waver on its new pricing system, even though it resulted in the loss of 800,000 customers at the time. But Hastings scrapped the Qwikster concept amid the backlash. The DVD-by-mail service, which has lost 6 million customers in the past 18 months and now has 8 million, is being allowed to slowly fade away.
While Netflix subscribers were howling, shareholders were dumping their stock. Investors feared the company wouldn't be able to attract enough subscribers to cover the steadily rising fees for licensing video rights.
Those worries have dissipated now that Netflix is growing rapidly again, something that Hastings had promised would eventually happen after apologizing for the Qwikster mistake and the way he handled the price increase.
After hitting a high of nearly $305 in July 2011 and then falling to below $53 last August, Netflix's stock is trading around $225.
"I don't have a sense of 'I told you so,' or something," Hastings told the AP last month. "I have a sense of satisfaction that we are doing what we do best, which is steadily improving our service."
Don't Watch A Movie Without Rating It
When you finish a show or movie on Netflix, the site requests that you give it between one and five stars, based on how much you enjoyed it. You're not being asked to rate that content for kicks, or so that you can later reminisce about how much you liked a certain film: Rather, Netflix has spent many years improving its recommendation engine, even offering a $1 million prize for anyone who could up the accuracy of Netflix recommendations by 10 percent. At this point, the Netflix recommendation engine is pretty darn accurate -- it takes into account your own ratings as well as the viewing habits of those similar to you. Basically, the more films you rate, the more you're likely to enjoy a Netflix recommendation. If you constantly find yourself frustrated that there's nothing on Netflix, take a half hour or so and knock out a few hundred ratings on the "Taste Profile" section of the site, and make sure you've filled in your genre preferences, too. Finally, if Netflix persists in recommending a title that you're just never going to watch -- for me, that would be "The Lincoln Lawyer" -- remember that you can click on the "Not Interested" button on any film's homepage and it will disappear from your recommendations page while simultaneously smartening up your future recs. (For an in-depth look at the Netflix recommendation engine, and how it works, I recommend this post on Netflix's official blog.)
Don't Fly Blind
Leaning on Netflix's recommendations alone ensures that you'll discover some good flicks; if you're really committed to shaking all the leaves from the tree, however, you're going to need some backup artillery. There are several excellent extensions that you can add to your favorite browser to augment your Netflix experience and increase your chances of sniffing out a great new film. An extension like "Rotten Netflix," for example, inserts little Rotten Tomatoes scores beneath every movie poster on the website, so that you can instantly know how a movie fared with critics. Similarly, the "IMFlixDB" extension displays a movie's IMDB ranking on a white bar above the Netflix homepage and gives you quick access to that film's information page. The ever-prodigious members at Reddit use the wisdom of crowds, meanwhile, to constantly vote up streaming movies that you might otherwise miss. It's a super-active community with consistently high-quality recommendations: Check it out here.
Don't Let A Film Disappear
Another Netflix specialty website is InstantWatcher, a clean website that allows for easier movie search than you'll find on the Netflix homepage. And while many outlets toast InstantWatcher for its quick and robust search functionality, we like it because it also lists the notable films that will disappear from Netflix Instant soon. There's even a Twitter feed that does nothing but tweet out the names of soon-to-be-expired Netflix movies. There is no worse feeling, in the whole entire world, than sitting down to watch a movie you've had in your Netflix queue only to discover that the movie has disappeared. Don't let it happen to you again.
Don't Be Afraid To Quit
One of the really nice things about a Netflix subscription is that you pay month-by-month; it's not like a cell phone contract where you're locked in for two years and you have to pay an exorbitant fee if you want to get out early or cancel service. With Netflix, you can quit for one month and come back the next: Netflix will save your queue and ratings for up to two years so that if you do come back, you don't really have to start over. So, if you're taking a vacation, or studying for the LSATs, or going to prison, just cancel your account and save yourself the $8 for as long as you need. Or, if you are one of our Olympian Netflix bashers from above, go ahead and try life without the 'Flix for a month or two and see how you do. Your account information will be waiting for you when (or if) you return; and, hey, if you do, now you have plenty of new ways to find the excellent movies and TV shows you might have missed while in exile.