• by Thom Forbes , October 22, 2013

To riff on Brian Stelter’s lede in the New York Times this morning, in a world where everyone with a smartphone seems to be a content creator, Netflix’ quarterly results released yesterday reinforced the notion that well-executed “content is the new black” — black halo, that is.

“Netflix has surpassed rival HBO in domestic subscribers in the third quarter, a milestone it credits to buzz surrounding such original series as ‘Orange Is the New Black,’ the Emmy nominations for the political drama, ‘House of Cards,’ and its exclusive content,” as Dawn C. Chmielewski reports in the Los Angeles Times.

But as Stelter points out deep in his story, “as important as original series are — they have, as [Netflix chief content officer, Ted] Sarandos said Monday, a ‘particular halo effect on the brand’ — the typical Netflix subscriber still spends a lot more time streaming repeats of TV shows that had their debuts elsewhere.”

Indeed, 90% of Netflix programming budget next year will be for retread movies and TV series, Stelter reports. With good financial reason. As CEO Reed Hastings writes in his letter his shareholders, “While our original series get most of the headlines, a bigger percentage of overall Netflix viewing is generated by our exclusive complete season-after series.” 

But Hastings also proudly refers to a 1:40 YouTube video — unabashedly titled “The Future of Television is Here” — that he writes is “an excellent summary of our early progress in original content.”

Here are the Netflix numbers — and Wall Street’s ecstatic reaction — for the quarter ending Sept. 30, as compiled by USA Today’s Roger Yu: “Net income rose 315% to $31.8 million …. Earnings per share of 52 cents beat analysts' average estimate of 49 cents. Revenue rose 22% to $1.1 billion. Shares jumped almost 10% in after-hours trading. Netflix rose $21.49, or 6.4%, to close regular trading at $354.99.”

Wedbush Securities analyst Michael Pachter, who has been “bearish” on the stock for some time, remains pessimistic about long-term results.

“The valuation makes no sense at all,” Pachter says, Bloomberg’s Cliff Edwards writes. Indeed, CEO Hastings indicated that he “isn't comfortable with the huge stock run-up,” CNNMoney’s Julianne Pepitone reports. “On a post-earnings conference call with analysts, he said Netflix thinks ‘momentum investors’ are ‘driving the price more than we like normally’ — but that it's out of the company's control.”

“That said, ‘the subscriber guidance number is probably the only one that anyone cares about,’ Pachter tells the NYT’s Stelter. “ ‘They’re guiding to similar growth year-over-year, which is a great result if it happens.’”

Speaking of hopeful outcomes, news began to surface last week that Netflix has been “in talks with several U.S. pay-television providers including Comcast Corp. and Suddenlink Communications to make its online video service available as an app on their set-top boxes,” as Shalini Ramachandran reported in the Wall Street Journal. 

Currently, shows are “funneled to televisions through users’ video-game consoles or standalone devices such as Apple TV or Roku’s Web-connected box. Viewers can also watch on their smartphones or tablets,” as Bloomberg’s Edwards writes. Janney Capital Markets analyst Tony Wible tells him that “there’s nothing to stop somebody who has a cable plan today from getting Netflix, but people will use it a lot more if it’s integrated into the set-top box.” 

But that’s easier wished-for than done, no less an authority than Hastings informs us. After citing its first such agreement with Virgin Media, the UK’s leading cable company, Hastings writes: “We are open to more of these integrations with cable set-tops around the world, but given the fragmented technology footprints, we think it will be many years before cable set-top boxes match Internet set-top boxes for Netflix streaming volume.”

The bad news for marketers, of course, is that one of the key attractions of Netflix programs is that they are free of advertising. “I tried Hulu, and that service is a joke,” writes one Netflix fan commenting on Chmielewski’s story in the Los Angeles Times. “Even after paying them you have to watch commercials.” Echoes another: “Best entertainment around and the good thing is ... no ads.”

The best news for consumers coming out of yesterday’s festivities, Forbes’ Jeff Bercovici writes, may have been a statement by Netflix’ Sarandos, who indicated that “Netflix is aiming to reduce another source of viewer annoyance: the long wait between new seasons.”

“Ideally, we’d like to reduce the cycle time between seasons to tighter than the one year it is today,” Bercovici said.

Nonstop bingeing.