In all the gushing over Netflix, there's room for caution

The reaction is predicable. The share price is not.

With a certain depressing predictability, the newspapers today are gushing in their praise for Netflix. The US-headquartered service now streams video to US 29.17m subscribers, up just over 2m since the start of the year, enabling it to claim to be the most watched network in the US.

Netflix added another 1m streaming members outside the US in the first quarter, bringing total international subscribers to 7.1m. It currently offers its service in Canada, Latin America and since early 2012, the UK. Netflix’s first quarter results provided a further boost to a share price that has been skyrocketing of late: at the end of last September, the share price was $55.

Since then, the share price has risen almost four-fold to $213. According to Netflix, its future success will be boosted by producing original content. The sum total of its original content to date is the grand total of one programme; that requires a generous definition of original, namely a remake of House of Cards.

It currently charges £6.99 per month in the UK; by contrast, the BBC licence fee seems really quite a snip. Just before potential investors empty the piggy bank and rush to invest in Netflix shares, they might care to reflect on the nature of this market sector. Netflix’s main rivals, the Amazon-owned LoveFilm and HBO, are not going to go away any time soon and can be expected to fight back.

If and when Amazon bids more aggressively for the rights to film and TV shows, the acquisition costs for Netflix cannot but rise. Also, as a number of sharper analysts have spotted, Netflix may have cash flow challenges, with $3.3bn in off-balance sheet content liabilities and only around $1bn in cash. As for producing further fresh content: House of Cards cost around $100m to produce. At that sort of cost, do not expect too many headline grabbing productions of that calibre to follow any time soon.

One other thing jumps out from the first quarter Netflix results and that is how way out the performance of the firm is compared to the management predictions. If the firms own management finds it so hard to predict its performance, heaven knows how the analyst community will get on in their forecasts.

Investors may get lucky and Netflix could be an acquisition target for an Apple or a Microsoft in the coming months. On the other hand, the shares are wildly volatile; not shares one would suggest for savings put away for a rainy day.

Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

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The TV stars MPs would love to be

Labour MPs dream of being Jed Bartlet.

In my latest book, A State of Play, I looked at the changing ways in which Britain’s representative democracy has been fictionalized since the later Victorian period. With the support of the University of Nottingham, we decided to turn the tables and ask MPs about their favourite fictional political characters. The results are intriguing.

All MPs were contacted, but with only 49 responding – that’s a 7.5 per cent return rate – I can’t claim the results are fully representative. At 22 per cent, women figured slightly less than they actually do in the Commons. But the big difference is in party terms: 71 per cent of respondents were Labour MPs – double their share in the Commons – while just 20 per cent were Conservatives, less than half their proportion in the Lower House. Maybe Conservative MPs are busier and have better things to do than answer surveys? Or perhaps they just don’t take political fiction – and possibly culture more generally - as seriously as those on the Opposition benches.

What is not subject to speculation, however, is that Labour MPs have very different tastes to their Conservatives rivals, suggesting they are more optimistic about what politics might achieve. At 22 per cent, the most favourite character chosen by MPs overall was Jed Bartlet, heroic US President in Aaron Sorkin’s romantic TV series The West Wing. Of those MPs who nominated Bartlett, every one was Labour. Of course Barlet is a Democrat and the series - dismissed by critics as The Left Wing – looked favourably on progressive causes. But it seems Labour MPs regard Bartlet as an archetype for more than his politics. As one put it, he is, "the ideal leader: smart, principled and pragmatic" For some, Bartlet stands in stark contrast with their current leader. One respondent wistfully characterised the fictional President as having, "Integrity, learning, wit, electability... If only...".

As MPs mentioned other characters from The West Wing, the series accounted for 29 per cent of all choices. Its nearest rival was the deeply cynical House of Cards, originally a novel written by Conservative peer Michael Dobbs and subsequently adapted for TV in the UK and US. Taken together, Britain’s Francis Urquhart and America’s Frank Underwood account for 18 per cent of choices, and are cross-party favourites. One Labour MP dryly claimed Urquhart – who murders his way to Number 10 due to his obsession with the possession of power - "mirrors most closely my experience of politics".

Unsurprisingly, MPs nominated few women characters - politics remains a largely male world, as does political fiction. Only 14 per cent named a female character, the most popular being Birgitte Nyborg from Denmark’s TV series Borgen. Like The West Wing, the show presents politics as a place of possibility. Not all of those nominating Nyborg were female, although one female MP who did appeared to directly identify with the character, saying: "She rides a bike, has a dysfunctional life and isn't afraid of the bastards."

Perhaps the survey’s greatest surprise was which characters and series turned out to be unpopular. Jim Hacker of Yes Minister only just made it into the Top Five, despite one Conservative MP claiming the series gives a "realistic assessment of how politics really works". Harry Perkins, who led a left-wing Labour government in A Very British Coup received just one nomination – and not from an MP who might be described as a Corbynite. Only two MPs suggested characters from Anthony Trollope’s Palliser novels, which in the past claimed the likes of Harold MacMillan, Douglas Hurd and John Major as fans. And only one character from The Thick of It was nominated - Nicola Murray the struggling minister. 

The results suggest that MPs turn to political fiction for different reasons. Some claimed they liked their characters for – as one said of House of Cards's Frank Underwood – "the entertainment value". But others clearly identified with their favourites. There is clearly a preference for characters in series like The West Wing and Borgen, where politicians are depicted as ordinary people doing a hard job in trying circumstances. This suggests they are largely out of step with the more cynical presentations of politics now served up to the British public.

Top 5 political characters

Jed Bartlett - 22 per cent

Frank Underwood - 12 per cent

Francis Urquhart - 6 per cent

Jim Hacker - 6 per cent

Birgitte Nyborg - 6 per cent

Steven Fielding is Professor of Political History at the University of Nottingham. Follow him @polprofsteve.