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Netflix (s NFLX) announced this week that it is renewing its original horror series Hemlock Grove for a second season, with 10 new episodes set to premiere in 2014. The news may come as a surprise to some: Netflix has spent a lot of effort promoting Arrested Development and House of Cards, but hasn’t made a big fuss about Hemlock. Critics who watched the show hated it, calling it a dud, a flop and “the company’s first truly bad series.”
And if you’re anything like me, then you have never seen Hemlock Grove pop up in your Netflix recommendations. Heck, chances are, you may have never heard about Hemlock before reading this article. But that’s OK; Netflix didn’t make the show for us. It’s aimed at an audience of teenage horror fans. And Netflix had the numbers to know that this audience was engaged enough on the streaming service to make a title like Hemlock Grove succeed.
Netflix has long puzzled the traditional TV industry by refusing to give out ratings for its original shows, despite the fact that House of Cards, in particular, seemed to have turned into a hit, both loved by critics and audiences alike. But the company has been dismissive of this kind of feedback, with Chief Content Officer Ted Sarandos telling me earlier this year that the absolute number of people who tune into a single episode doesn’t matter all that much. “When you say 10 million people watch a show, that really doesn’t tell you anything,” he said when I met him at an industry conference in February.
Instead, Netflix is looking to cultivate dedicated niche audiences, and is paying very close attention to the ways its subscribers are interacting with each piece of content. If they watch en episode of a show, are they opting to watch the second one as well? If they go from watching a movie to a TV show episode, does it fit into a pattern that lets you predict about what they’re going to watch next?
Sarandos told me that Netflix is using a mix of data and intuition when it makes decisions on original content. I’d bet that with renewals, data wins over gut feelings. And the fact that Netflix decided to renew Hemlock Grove doesn’t make the show good television — but it shows that the company’s algorithms are working.