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Analysis for 'Netflix'

  • VideoNuze Podcast #487: Digging Into Netflix’s Path Forward

    I’m pleased to present the 487th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Netflix reported its Q3 ’19 results this week, the last quarter before the onslaught of new SVOD competition begins from Disney+, Apple TV+, HBO Max and Peacock, among others.

    In this week’s podcast Colin and I discuss the Q3 results, which were strong internationally and decent in the U.S. (better than Q2 ’19, but still well down from Q2 ’18 and below Netflix’s own forecast). But we focus mainly on where things go from here.

    We agree that the days of Netflix’s robust U.S. growth are almost certainly over. But we also think Netflix’s content remains highly competitive and international could continue expanding strongly in the short-term, depending on how quickly Disney+ rolls out to other geographies. In short, there is a lot of uncertainty given all the new choices coming to market.

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  • Netflix Reports Solid Q3 Results But Uncertainty Lies Just Ahead

    Netflix investors breathed a sigh of relief after yesterday’s Q3 '19 earnings report. The company missed its subscriber forecast of 7 million subscriber addition, but only narrowly by a few hundred thousand. Netflix added 500K subscribers in the U.S. vs. its 800K forecast. That was a far better performance than Q2 when it lost 130K subscribers in the U.S. Internationally Netflix gained 6.3 million subscribers, basically in line with the 6.2 million it forecast.

    The U.S. miss was blamed mainly on an elevated churn rate that Netflix said hasn’t normalized since rate increases went into effect earlier this year. The good news is the higher rates translated into 16.5% increase in average revenue per unit in Q3.

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  • As Disney Moves Into SVOD, It is Navigating New Terrain

    Last week, the WSJ ran two articles that underscore how Disney is navigating new terrain as it prepares to launch Disney+ in November. The articles also showcase how convoluted relationships among major media and technology companies are going to become over fights for shifting leverage.

    One article described how Disney has continued to ban advertising from Netflix on its entertainment TV networks (ESPN is still ok) even though it will accept ads from other SVOD providers. The other article described Disney’s negotiations with Amazon over how much ad inventory Amazon should be allocated to sell in Disney’s apps that run on Fire TV. The article noted no deal at all has been reached for Disney+ to be carried on Fire TV, as the SVOD service’s launch date nears.

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  • VideoNuze Podcast #475: Is Netflix’s Q2 ’19 Subscriber Slowdown a Short-Term Blip or Start of a Long-Term Trend?

    I’m pleased to present the 475th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Was Netflix’s Q2 ’19 subscriber slowdown a short-term blip or the start of a long-term trend? This is the question Colin and I dig into on this week’s podcast.

    This week Netflix reported its first-ever domestic streaming subscriber loss, dropping 130K paid subscribers to end the quarter with 60.1 million paid subscribers. The loss compared with a forecasted gain of 300K and a gain of 870K a year ago in Q2 ’18. And internationally, Netflix gained 2.83 million paid subscribers to end the quarter with 91.5 million subscribers, compared with a forecasted gain of 4.7 million and a gain of 4.6 million a year ago in Q2 ’18. So all in, Netflix’s global subscriber gain dropped roughly in half, from 5.45 million in Q2 ’18 to 2.7 million in Q2 ’19.

    Netflix blamed a weak Q2 content slate and to a lesser extent price increases in the U.S. and expects Q3 to return to typical growth. But Colin and I note new SVOD dynamics ahead that could scramble things such as the loss of key content like “Friends” and “The Office,” strong entrants like Disney+ and HBO Max. It’s hard to tell how it all shakes out just yet.

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  • Research: Three-Quarters of Netflix’s Top 20 Most Popular Shows are Originals

    It’s been just 6 1/2 years since Netflix debuted its breakout original series “House of Cards” and new research from MoffettNathanson and HarrisX show just how much progress the company has made since: 15 out of the top 19 most popular TV shows are now original, with the remaining 4 acquired (the research credits “movies” as the 3rd most popular).

    The most popular show is “Orange is the New Black” followed by “Stranger Things.” #4 is "Ozak" and #5 "Grace and Frankie." Of the acquired shows, “The Office” (which is moving to NBCU’s streaming service) is #9, while “Friends” (which is moving to WarnerMedia’s streaming service) is #10. “Supernatural” (#12) and “Breaking Bad” (#20) are the only other acquired shows in the top 20. Somewhat surprisingly, originals accounted for 13 of the top 19 shows on Amazon Prime Video (movies were #6). For Hulu, just 5 of its top 19 were original, with the majority of acquired shows coming from Disney/Fox (movies were #10).

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  • VideoNuze Podcast #463: Disney+ Ultra Low Price Will Ripple Through SVOD

    I’m pleased to present the 463rd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    The SVOD industry’s dynamics are harder than ever to predict now that Disney+ plans to come to market with a robust content offering priced at just $7 per month. So for example while Netflix reported a strong Q1 ’19, when Colin looks ahead to how Q4 ’19 or Q1 ’20 will shape up for Netflix given omnipresent promotion of Disney+ that’s coming, he sees an adverse impact on domestic subscriber additions.

    We discuss how significant the impact could be not just on Netflix but also on Apple TV+ which will come to market in late ’19 too, but have a much less competitive content offering vs. Disney+. A key question is how low must Apple TV+’s price now be to compete?

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  • VideoNuze Podcast #458: DirecTV Now Changes Packaging; Fact-Checking Netflix

    I’m pleased to present the 458th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Earlier this week, DirecTV Now changed its packaging and pricing by introducing 2 new tiers, DirecTV Now Plus and DirecTV Now Max. They are both anchored by HBO, but also lose popular networks from Viacom, Discovery and AMC.

    On today’s podcast Colin and I discuss the likely rationale behind the changes and what impact they’ll have. One thing seems clear: given the spectrum of TV networks they carry, Hulu Live TV and YouTube TV are poised to become leaders in the virtual pay-TV industry.

    Next, Colin updates us on several statements a Netflix executive made earlier this week that he believes need further clarity. Colin delights in “keeping them honest” and his watchdog role benefits all of us trying to understand industry data.

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    Click here to listen to the podcast (24 minutes, 30 seconds)



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  • Corporate Priorities Test Creative Freedom In “Peak TV” Era

    Large corporations’ priorities are testing creative freedom as more shows than ever compete for attention in the “Peak TV” era and video becomes a critical C-level focus. Exhibit A is Apple, which according to a report yesterday from the NY Post, is vexing creators with an abundance of suggestions (or “notes” in industry parlance) on their shows. The notes, which apparently include some from CEO Tim Cook himself, tend to emphasize Apple’s desire to keep shows “family friendly.”

    The goal makes perfect sense; nothing is more important to Apple than its brand image. The prospect of seeing an “Apple Original” icon in the opening credits, followed by an opening scene including profanity, violence or nudity, would be a jarring juxtaposition. Yet this is the “Peak TV” world we now live in; with so many shows competing for viewers’ time, those that are most original and creative, and yes, often include attention-grabbing early scenes, stand out (for a point of reference recall that in the first minutes of Netflix’s “House of Cards” pilot, Kevin Spacey’s character puts a wounded dog out of its misery with his own hands).

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  • 5 Reasons Why Netflix Will Maintain Strong Subscriber Retention Despite Boosting Rates

    Wall Street cheered last week when Netflix announced rate increases across all of its tiers. Meanwhile, analysts weighed in on how higher rates could impact subscriber retention. Coincidentally, The Diffusion Group released research detailing potential downgrades, cancellations and retention levels at $1, $3 and $5 rate increases (the breakout is at bottom and TDG head Michael Greeson concluded the new rates won’t lead to a mass exodus of Netflix subscribers).

    Obviously it’s impossible predict exactly how well subscribers will absorb the rate increases, though Netflix’s track record is very strong. From my vantage point there are at least 5 interdependent reasons to believe Netflix will weather the new round very well:

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  • VideoNuze Podcast #449: Why Most Subscription Video Services Will Trend Away From DTC Model

    I’m pleased to present the 449th edition of the VideoNuze podcast (and our first of the new year!), with my weekly partner Colin Dixon of nScreenMedia.

    On this week’s podcast, Colin and I discuss why we both believe most subscription video services will trend away from a pure direct-to-consumer (DTC) model and instead embrace large platforms for distribution. Roku’s plan to support subscription services (following Amazon Channels and Apple’s TV app) bolsters the trend.

    There are numerous benefits to third party distribution for both content providers and consumers. DTC will still have a place in go-to-market strategies, but it will become smaller, except for major players like Netflix and Hulu.

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  • VideoNuze Podcast #448: The Top 10 Video Stories of 2018

    I’m pleased to present the 448th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Continuing our tradition for our final podcast of the year, this week Colin and I discuss the top 10 video stories of 2018 - at least in our humble opinions. Once again it has been a very active 12 months, with lots of innovation and change. Colin and I have had a great time analyzing and discussing the critical industry trends each week and we hope you’ve enjoyed listening to our thoughts in 2018.

    Let us know what you think of our choices, whether you agree or disagree!

    Listen in to learn more!

     
    Click here to listen to the podcast (37 minutes, 16 seconds)



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  • SVOD’s Big Night at the Emmys

    If you’re looking for more evidence of how SVOD is changing the TV landscape, look no further than last night’s Emmy Awards. The 3 big SVOD providers, Amazon, Hulu and Netflix combined to win a record 35 Emmys, up from 32 in 2017. Netflix itself won 23 Emmys, tying HBO for top honors, with Amazon winning 8 and Hulu winning 4.

    Netflix’s big winner was “The Crown” which took home 5 Emmys. All of Amazon’s awards were for “The Marvelous Mrs. Maisel” including outstanding comedy series, lead actress (Rachel Brosnahan), supporting actress (Alex Borstein) and writing and directing for Amy Sherman-Palladino. Maisel tied with Saturday Night Live for second place behind “Game of Thrones” which won 9, including outstanding drama series.

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  • Comcast Drops Fox Bid, Foregoing A Major Opportunity With Hulu

    Comcast has officially dropped out of the bidding for the 21st Century Fox assets, clearing the path for Disney to move forward. Comcast still plans to pursue Sky in the UK. But by dropping its Fox bid, Comcast has also foregone the opportunity to take control of Hulu (by virtue of combining its 30% stake with Fox’s 30% stake). Presumably now Disney will take control of Hulu.

    I believe this is a major missed opportunity for Comcast, leaving the company under-optimized in the fast-changing premium video industry. As we all know, today’s key industry themes include the rise of cord-cutting and consumers’ move to lower cost skinny bundles, the shift to on-demand viewing, with the accompanying growth of ad-free SVOD services (e.g. Netflix, Amazon, Hulu), the rapid adoption of connected TV and mobile devices for viewing and the nationalization/globalization of video services, among others.

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  • Netflix is Bedeviled by Domestic Subscriber Forecasting

    Netflix reported a large miss on its subscriber forecast in Q2, with 670K net additions in the U.S. (44% below its forecast of 1.2 million) and 4.47 million net additions internationally (10% below its forecast of 5 million). From my standpoint, the international miss is almost irrelevant because the segment includes so many different countries with so many different adoption patterns that Netflix is still new to understanding. With all of those moving pieces, missing by just 10% isn’t too shabby.

    Conversely, the domestic miss of 44% is a real head-scratcher which I believe raises, yet again, real questions around how well the company understands the dynamics of the domestic SVOD market, how much growth remains and how well its forecasting function is run. For eager investors, who have bid up the stock on lofty expectations, getting a handle on these issues seems critical.

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  • VideoNuze Podcast #427: HBO’s Risky Path Forward Under AT&T

    I’m pleased to present the 427th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    AT&T wants HBO to up its game - producing more content, gaining more subscribers and increasing engagement, in a bid to stay competitive in the streaming era. On today’s podcast, Colin and I explore why the new approach makes sense directionally, but also carries big risks. Can HBO scale up its production spending and broaden its distribution while retaining its brand positioning? It won’t be an easy feat.

    While AT&T isn’t highlighting Netflix as its key competitor, it’s clearly implied. And this week’s Emmy nominations, which saw HBO eclipsed for the first time in 17 years as the most honored network (by Netflix), is a clear sign of the times. Astoundingly, Netflix has gone from just 14 nominations 6 years ago to an industry-leading 112 this year.

    Beyond the HBO-Netflix content battle, Netflix continues raising the stakes on SVOD user experience. As we also dig into, this week Netflix announced “Smart Downloads,” a clever way of enhancing offline viewing, which will no doubt delight millions of its subscribers.

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  • Netflix Evolves from Avowed Downloading Skeptic to Impressive Innovator

    Yesterday Netflix announced a very cool new feature called “Smart Downloads,” which automatically deletes an episode you’ve downloaded and finished watching on your mobile device, triggering the download of the subsequent episode. The process happens as soon as you’ve connected to WiFi and occurs invisibly in the background. Smart Downloads is available for Android devices now and for iOS devices later this year.

    Smart Downloads is a clever way of automating a manual process, so that users always have something downloaded and ready to watch (although having to manually download a TV episode clearly falls in the category of “first world problems”). Smart Downloads is a a savvy move by Netflix to increase subscribers’ engagement time, which in turn leads to higher satisfaction and better retention. But perhaps most fascinating about Smart Downloads is that it illustrates how fully and quickly Netflix has evolved from an avowed downloading skeptic to an impressive innovator.

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  • With Netflix Envy, AT&T Begins Revamp of HBO’s Success Formula

    Just weeks after closing its acquisition of Time Warner, AT&T has begun the process of revamping HBO’s traditional success formula, with Netflix envy apparently the main catalyst. According to a new NY Times article detailing a town hall meeting that Warner Media CEO John Stankey had with HBO employees, the new strategy boils down to wanting HBO to produce vastly more content with a goal of driving up engagement time and growth.

    That sounds a lot like the formula that Netflix has employed for years, spending billions of dollars per year on scores of original programs in a global land grab for subscribers, while de-emphasizing profit maximization. Of course Wall Street has fallen in love with Netflix’s approach. Conversely, HBO has pursued a more limited “boutique” content strategy, with a few key marquee programs, while maximizing profitability.

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  • VideoNuze Podcast #421: Comcast-Fox, SVOD Movies, Reduced Ad Loads

    I’m pleased to present the 421st edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    On this week’s podcast we cover 3 different topics. First up is Comcast’s announcement this week this it plans an all-cash offer for the Fox assets Disney has agreed to buy. We don’t have time to fully analyze the move, but both of us see it as a bold doubling-down by Comcast on the traditional multichannel TV model. We speculate about whether Comcast should diversify with a skinny bundle offering, as I described yesterday in taking control of Hulu.

    Next up we discuss new research from ACSI focused on the lagging role of movies in SVOD and Netflix specifically (which is being addressed with 86 releases in 2018). Lastly, we turn to data from Advertiser Perceptions showing ad buyers are only willing to pay a small premium to be in lighter ad load environments. I’ve previously speculated about whether the math would work for TV networks by reducing their ad loads.

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  • Why Comcast Should Take Control of Hulu

    Yesterday’s confirmation by Comcast that it is preparing an all-cash bid for Fox assets that would top Disney’s current bid came as no surprise. All that remains now for this corporate drama to go into overdrive is the decision on June 12th in the AT&T-Time Warner court case. If that deal is approved (which I believe is likely), Comcast is expected to formalize its Fox offer almost immediately. As these machinations continue, one looming question is what will become of Hulu?

    Hulu is of course a joint venture among Disney, Fox and Comcast (via its NBCUniversal acquisition), with each company owning 30% and Time Warner owning 10% (that’s rounding as Hulu employees also own a piece). That means the ultimate owner of the Fox assets - Disney or Comcast - will also become a majority owner of Hulu. It seems to me Hulu would be more valuable to Comcast, and indeed Comcast should be angling to try to figure out how to take control of Hulu regardless of how the larger Fox deal sorts out. Why?

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  • VideoNuze Podcast #416: Netflix’s Impressive Q1; Amazon and Best Buy Partner for Smart TVs

    I’m pleased to present the 416th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    Netflix reported its Q1 ’18 results earlier this week and once again the performance was very strong, with revenue up 43% and average paid streaming subscribers up 25% to 125 million globally. Colin and I discuss what’s driving the company. With 55.1 million paid U.S. subscribers at the end of Q1, it’s possible that Netflix will hit 60 million by the end of 2018, which is the low end of the range of 60-90 million the company has long said it believed it could achieve.

    We then turn to discussing Amazon’s new deal with Best Buy for its “Fire TV Edition” smart TVs, which were announced earlier this week. We agree that the move is yet another aggressive step in Amazon’s goal to dominate both the living room and whole home. Amazon’s CEO Jeff Bezos also announced this week that Prime has hit 100 million subscribers with video continuing to drive acquisition and retention. Colin and I both see Amazon expanding further by launching a skinny bundle pay-TV service sometime in 2018.

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