Netflix Revives a Cult Classic -- and Its Own Fortunes

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Arrested Development: Netflix Revives a Cult Classic Sooner or later, you knew that Netflix (NFLX) would stop doing stupid things.

The beleaguered flick flicker will be the exclusive home of Arrested Development when the critically acclaimed comedy returns to television in 2013 after a seven-year hiatus.

Striking a deal with Twentieth Century Fox Television and Imagine Television to produce a revival of the cult-classic series is a brilliant move after months of brutal Netflix missteps.

A History of Stumbling

Netflix's plunge into self-administered brand bashing began after announcing a summertime pricing change that would raise monthly rates for some members by as much as 60%. The insensitive decision made the dot-com darling a popular target.

Netflix made matters worse when it revealed that couch potatoes renting DVDs by mail would be shipped over to Qwikster, a new website that would also include video game rentals. The public outcry over Netflix inconveniencing its users by splitting in two convinced the company to nix Qwikster three weeks later, but the only beneficial aspect of Qwikster -- video games by mail -- apparently died along with the spinoff website.

Larger than expected subscriber cancellations, sloppy financials, and a bleak near-term outlook took the life out of the shares and the brand.

Can the Bluth family arrive to save the day?

Bluth or Consequences

Arrested Development
is a half-hour sit-com that chronicles the madcap shenanigans of the eccentric Bluth family. Jason Bateman starred as Michael Bluth, the one sane character challenged by his inept siblings, carefree mother, and imprisoned father.

The show ran for three seasons on Fox, before low ratings killed it in 2006. As a critics' fave with a strong cult following, the past few years have been filled with chatter of a fourth season or perhaps a full-blown Arrested Development movie.
Now it appears as if fans will get both a theatrical release and a long overdue fourth and likely farewell season.

Watching What You Watch

As shares of Netflix have shed roughly three quarters of their peak summertime value, cynics have failed to consider that the video subscription service still has more than 20 million streaming customers worldwide.

Netflix also has years of viewer data ratings. Even before it began streaming content, Netflix has used past rental histories and star ratings on individual films to provide customized movie and television show recommendations. Netflix's catalog is deep, but so is its data mining.

The first three seasons of Arrested Development are available both as streams on Netflix.com and on DVD. In other words, few people know more than Netflix how popular the show is even to this day. It has the intelligence to pick which shows are worth reviving to go with the largest subscriber base of any premium streaming video service.

Playing the Cards It Was Dealt

This isn't the first time that Netflix has made what is likely a steep financial commitment for the sake of new and exclusive programming. Earlier this year it was the top bidder for House of Cards, a David Fincher series starring Kevin Spacey that will debut on Netflix late next year.

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Netflix continues to spend most of its time inking deals for more movies and television shows, but these one of a kind content deals bear watching.

Whether Netflix will admit it or not, it's becoming the HBO or Showtime of streaming with these moves that stretch out viewer engagements. Someone can catch up on a show or a movie series during a weekend streaming marathon, but having unique content that it can stagger weekly will keep customers close for months.

Winning Back the Netflix Brand

Few people subscribe to premium movie channels for the theatrical releases anymore. Original programming is what keeps churn in check at Time Warner's (TWX) HBO and CBS' (CBS) Showtime. At $7.99 a month, Netflix is cheaper than the movie channels -- and folks don't have to pay hefty ransoms for primary cable or satellite television plans that are required to have access to the premium channels.

Netflix is still reeling. The fact that House of Cards is a year away -- and Arrested Development's fourth season being two years away -- isn't helping.

Neither show is assured of being a slam dunk. The Fincher-Spacey combo sounds like it can't miss, but no one is handing Netflix an Emmy for its spec sheet. We still don't know how much of the original cast Imagine Television will be able to bring back. What if the show just isn't funny after a seven-year lull?

However, it's still better for Netflix to be where it is now in garnering karma points for playing a role in reviving an iconic series than it was earlier this month as simply a widely despised company. Just wait and see if Netflix can breathe new life to some of the other shows that were cancelled too soon. Just wait until the next time a show's premature nixing finds fans kicking off a letter-writing campaign, not to the network axing the show but to Netflix pleading for it to step up as a savior.

Where are you, Community fans? Speak up Firefly buffs.

The conversation is changing in Netflix's favor, saving one Bluth at a time.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article, except for Netflix. Motley Fool newsletter services have recommended buying shares of Netflix.



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