Posts for 'Netflix'

  • Inside the Stream Podcast: Netflix’s Growth Slows, But It Remains the SVOD Leader

    Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

    This week we discuss Netflix’s Q4 ’21 earnings report released yesterday and its forecast for Q1 ’22. Both came up a little light, as the SVOD category continues to mature, Covid pull-forward creates tough comparisons, there’s intensifying competition, and Netflix’s release schedule for popular content shifts.

    All of that said, with over 220 million global subscribers, Colin and I still see Netflix as the SVOD category leader well into the future.

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  • Why I'm Taking a Break from Watching Netflix

    Yesterday Netflix reported its Q3 2021 earnings results. Ordinarily, as I’ve been doing for many years the day after Netflix’s earnings are released, I would be writing about the results, how many subscribers the company gained or lost, and how I interpreted the numbers.

    Today I’m not going to do any of that. Instead, I’d like to explain why I’ve been taking a break from watching Netflix since last week and why I plan to continue doing so.

    I’ve been writing VideoNuze since 2007. Two weeks ago, as part of a redesign, I took a step back, and observed that I’ve written around 2,500 VideoNuze posts, totaling approximately 2 million words. That’s a lot to say, especially for someone who considers himself an introvert. There have been a lot of times I’ve wanted to share something that might be considered political. Aside from a periodic rant about “net neutrality,” I’ve been pretty disciplined and not done so. I have enough outlets in my life to discuss politics and my world views, and I know these aren’t the things busy people who read VideoNuze read it for.

    But today I’m making an exception.

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  • Inside the Stream Podcast: Netflix Q2 2021 Earnings - Is There Such a Thing as Too Much Focus?

    Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

    Netflix reported its Q2 2021 earnings this week, and considering the most critical metric of U.S. and Canada subscriber additions/losses, the company did very well. Sure, it lost 430K subscribers, reversing a big Q2 2020 Covid gain, and also tripled its 130K loss from Q2 2019. But it could have been a whole lot worse if post-Covid churn had spiked which would have sent Wall Street into a tizzy.

    After reviewing the numbers, Colin and I zero in on the fact that while Netflix has numerous revenue expansion opportunities, it seems uninterested in any of them. In fact, the theme of this quarter’s earnings conference call was Netflix’s 100% focus on SVOD. It has no plans to make money from its new video gaming service. Live sports is still mainly off the table. The new commerce extension won’t generate anything material. And a lower-priced advertising-supported tier? Well the analyst/moderator didn’t even ask about it.

    Colin and I are really scratching our heads. It’s like Netflix’s management took a sacred oath: “We will not make money beyond SVOD.” “We will not make money beyond SVOD.” “We will not make money beyond SVOD.”

    For my part I’m growing weary of these “religious” responses. I have been doggedly saying Netflix needs to launch a lower-priced ad-supported tier for ages. The CTV ad business in the U.S. alone in 2021 will be $13B, going to at least $28B in 2025. As the biggest player in brand-safe streaming, Netflix has an automatic claim on a portion of this revenue. Perhaps most important, there is simply no other catalyst as sizable for Netflix’s top and bottom lines. But it won’t entertain the option, asserting in the past that it will diminish the user experience, though it hasn’t provided any meaningful backup to support its position.

    There’s a lot to be said for staying focused, but in our view, this is getting a little bit ridiculous.

    Please let us know what you think!

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  • Netflix Q2 2021 Earnings Report: Whew!

    If you detected the wind pattern figuratively shift around 4:01pm Eastern Time yesterday, you weren’t imaging it. Rather, the shift was due to the collective exhaling of Netflix stockholders who were justifiably on edge about the company’s Q2 2021 earnings report, and in particular its subscriber additions, especially in the all-important UCAN (United States and Canada) region.

    Q2 2021 was the first quarter to be comp’d against a full Covid quarter, Q2 2020. It is old news that Covid created many major distortions in the economy, but perhaps the biggest distortion (aside from the bizarre run on toilet paper) was the massive acceleration in streaming and connected TV. And few companies benefited more from shelter-in-place orders than Netflix, which in Q2 2020 gained over 10 million global subscribers, on top of the 15.8 million it added in Q1 2020.

    To say that first half 2020 would be a tough act to follow in UCAN would definitely qualify for the understatement of the year award. Netflix said last year that it was experiencing a “pull forward” in demand. Results in Q1 2021 began bearing that out with global subscriber additions coming in at 3.98 million, obviously way down from the freakish first quarter of 2020, but also just a fraction of the 9.6 million global subs that Netflix pulled in back in Q1 2019.

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  • Report: SVOD Market Fragments Following New Service Launches

    The U.S. SVOD market has undergone significant fragmentation over the past two years as new services have launched, according to the Q1 2021 Growth Report from Antenna, an SVOD insights provider. In Q1 ’19, Netflix and Hulu together accounted for over three-quarters (78%) of all SVOD subscriptions. But two years later, in Q1 ’21, their combined share fell to just over half (51%), with Disney taking 17%, HBO Max 11%, Paramount+ 7%, Starz 6%, Showtime 4% and discovery+, Peacock and Apple TV+ all at 2%.

    Antenna didn’t report Amazon Prime Video numbers. Amazon said in its Q1 ’21 earnings report that 175 million Prime members have streamed TV shows and movies in the past year, though it didn’t provide any breakdown of U.S. share vs. rest of world.

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  • VideoNuze Podcast #553: Should Netflix Crackdown on Password Sharing or Consider an Ad Model?

    Welcome to the 553rd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    On today’s podcast Colin and I explore whether Netflix should pursue a crackdown on subscribers sharing their passwords (as it’s doing in a trial) or if it should consider launching a lower-priced, advertising support tier, or if it should do both.

    Earlier this week Colin shared thoughts about the potential consequences of policing passwords and I wrote about the benefits of offering subscribers more pricing flexibility as other streaming services do already. On today’s podcast we dig deeper into both of these approaches and agree an action plan will become more urgent if there’s a fall in U.S. subscribers in the first or second quarter this year.
     
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  • Revisiting Why Netflix Should Launch an Ad-Supported Tier

    Back in December, 2019, before the pandemic upended everything, I speculated that Netflix would launch an ad-supported tier in 2020. Subscriber growth in the U.S. was slowing in 2019 and there was reason to believe that in Q1 ’20 Netflix might lose subscribers in its UCAN (U.S. + Canada) region.

    A lower-priced ad-supported tier would have multiple benefits: reducing churn, revenue growth/diversification by tapping into the white hot connected TV ad market, a way to compete with new lower-priced streaming entrants, new growth story for investors, etc. The key challenge was that Netflix had for years said it had no interest in an ad-supported tier; it wanted to stick to its ad-free brand identity and user experience.

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  • VideoNuze Podcast #550: Paramount+ Details; Netflix Downloads

    Welcome to the 550th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    ViacomCBS shared more content and pricing details for Paramount+ this week, ahead of its March 4th launch. Colin and I agree that from a content perspective, it’s an “everything but the kitchen sink” strategy, with a strong lineup of 30K+ TV episodes and 2,500 movies, plus sports, kids and originals. ViacomCBS repeatedly referred to the Paramount+ approach as a “mountain of entertainment.”

    Paramount+ is also priced aggressively, at $4.99 per month with ads and $9.99 per month without ads. That’s slightly less than Hulu’s comparable tiers and equal to Peacock’s pricing. Colin and I are interested to see what the Paramount+ ad load looks like compared to Hulu and Peacock.

    We also discuss Netflix’s new Downloads For You feature, announced earlier this week. Colin has given it a spin and while we agree the feature is a valuable, it is diminished by the content that is recommended, which didn’t match Colin’s tastes.

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  • Netflix’s New Download Feature Pushes Recommended Content to Mobile Devices

    Netflix has introduced “Downloads For You,” a clever feature that automatically downloads recommended TV shows and movies to users’ mobile devices. For now the feature is available on Android devices globally, with iOS devices being tested soon (I’m an iOS user so I haven’t been able to try it out yet). Netflix users opt in to Downloads For You and then choose how much space they want to allocate on their device for recommended downloads - 1GB, 3GB or 5GB. 

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  • VideoNuze Podcast #545: Both AVOD and SVOD Keep Growing

    Welcome to the 545th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    AVOD services are growing strongly, yet linear TV still accounts for 90% of video ad spending. This week Colin and I discuss a new report from Tubi that details how advertisers can now only reach a sizable share of younger audiences by shifting more spending to AVOD. With AVOD services poised to grow even further in ’21, advertisers will be pressed to reevaluate their spending decisions.

    Meanwhile, it’s not just AVOD that’s growing, it’s SVOD too, as Netflix’s Q4 and full year earnings report underscored. Netflix added nearly 37 million subscribers, with international making the biggest contribution. We dig into the highlights of the report, including analysis of differences in Netflix’s results by region.

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  • Netflix Tops 200 Million Subscribers With Huge Covid Tailwind

    Netflix reported its Q4 and full year results late yesterday, ending 2020 with 203.7 million global subscribers. For the full year Netflix gained 36.6 million subscribers, expanding its base by nearly 22%. Approximately 43% of the year’s gain, or 15.8 million subscribers, came in Q1, as Covid-related sign-ups surged in the last few weeks of the quarter.

    In Q4, Netflix added 8.5 million subscribers, beating its forecast of 6 million additions. EMEA was the biggest contributor in the quarter, up 4.5 million subscribers, or about 53% of total. EMEA is Netflix’s second-biggest region, with 66.7 million subscribers, or 32.7% of total. The UCAN region (U.S. plus Canada) remains the biggest region by subscribers and average revenue per subscriber. UCAN accounted for 73.9 million subscribers at year end, or about 36.3% of total. However, UCAN grew by just 860K subscribers in Q4, the lowest of the four regions.

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  • Nielsen: Netflix, “The Office,” and Kids Movies Top 2020 Streaming

    2020 was a strong year for streaming across the board, but newly released Nielsen data reveals some of the biggest winners. At the top of the list was “The Office,” which racked up the most viewership of any TV show, with 57.1 billion minutes streamed for its 192 episodes on Netflix.

    Along with “The Office,” 6 of the top 7 streamed shows in 2020 were licensed content (and all were on Netflix). The only original show in the top 7 was “Ozark” with 30.4 billion minutes streamed. Ahead of it were “Grey’s Anatomy” (39.4 billion minutes) and “Criminal Minds” (35.4 billion minutes) and just behind it were “NCIS” (28.1 billion minutes), “Schitt’s Creek” (23.8 billion minutes) and “Supernatural” (20.3 billion minutes).

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  • VideoNuze Podcast #511: Netflix is On a Roll

    I’m pleased to present the 511th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. We wish all of our listeners good health and hope everyone is staying safe.

    Earlier this week, Netflix reported an unexpectedly large gain in global subscribers for Q1 ’20, which management attributed to the shelter-at-home situation. On today’s podcast Colin and I discuss how Netflix has uniquely benefited from shifting viewership and also how it will continue to do so in Q2 and likely during the second half of the year.

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  • What’s Ahead For Netflix After Gaining Nearly 16 Million Subscribers in Q1 ’20?

    Netflix demonstrated what a huge beneficiary of shelter-in-place the company has become, reporting 15.8 million net subscriber additions globally for Q1 ’20. The number was over twice as large as the 7 million that Netflix had forecast for its Q1 gain back in January. Netflix was well ahead of forecast in all 4 of its geographic regions and now has 183 million global subscribers, cementing its position as the largest SVOD service by far.

    The region that is most intriguing to me is the U.S. plus Canada region (“UCAN”), where, back in January, I thought there was a 50-50 chance Netflix could actually lose subscribers in Q1, for the first time. That was based on Netflix’s global forecast and looking at recent growth trends in the other 3 regions. Instead, Netflix added 2.31 million subscribers in Q1 ’20, up from 1.88 million in Q1 ’19.

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  • Netflix Q1 ’20 Net Subscribers Should be Better Than Forecast

    The world has completely changed due to the virus. There are countless examples of this across every industry. In streaming video, one clear example is that Netflix will likely swing from a 50-50 chance of losing subscribers in its UCAN (U.S. plus Canada) segment in Q1 ’20 to gaining subscribers in the period when it reports next Tuesday. One data source that's leading me to change my view is Antenna, a business intelligence startup that has been tracking underlying purchase data on SVOD providers, yielding insights on their subscriber additions and churn rates.

    Just to step back for a moment, following Netflix’s Q4 ’19 earnings release that included its Q1 ’20 forecast, some basic calculations I did suggested that Netflix itself was preparing for a loss in UCAN subscribers in Q1 ’20. The company was forecasting global net subscriber additions of 7 million in Q1 ’20, down from 9.6 million in Q1 ’19. In addition to a trending slowdown in 2019, Netflix seemed to also be expecting an adverse impact from the Disney+ launch in Nov. ‘ 19.

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  • VideoNuze Podcast #508: Virus Keeps Changing Viewing and Monetization

    I’m pleased to present the 508th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. We hope all of our listeners are staying well and we urge everyone to take all precautions possible.

    In this week’s podcast, we focus on how the virus and stay at home guidelines are continuing to change viewership and monetization. First up we review Conviva data that shows a huge uptick in daytime viewing. Colin shares Nielsen data that Netflix recently accounted for 29% of video streaming on TVs and 9 out of the top 10 most viewed streaming shows.

    Colin likes Sling TV's “Stay in & SLING” initiative, which seems like a smart on-ramp to get viewers engaged with free VOD content. HBO’s decision to make 500 hours of its classic TV programs and Warner Bros. movies available for free is in line with this thinking and a great promotion for HBO Max. We agree that Quibi could also benefit from a free tier of content, beyond the 90-day trial it is offering at launch.

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  • 6 Reasons Why Netflix Should Launch An Ad-Supported Tier Now

    VideoNuze readers will recall that several months ago I made a prediction that Netflix would launch a lower cost (around $5-$7 per month) ad-supported tier in 2020. I predicted this despite Netflix management having steadfastly resisted the model, because I believed the logic was just so compelling and straightforward that no “religious” argument to the contrary would preclude it.

    However, a month after posting, on Netflix’s Q4 ’19 earnings call, management once again rejected the idea. In my and other analysts’ view, Netflix offered what seemed to amount to a “we can’t chew gum and walk at the same time” argument that focused on its perceived inability to compete effectively with the ad triopoly of Google, Facebook and Amazon. Despite CTV ad dollars being scooped up by the likes of Hulu, CBS All Access and other premium video providers, Netflix somehow concluded it simply couldn’t play.

    With the coronavirus upending life and prompting a surge in stay-at-home viewing, I’d like to suggest 6 reasons why now would be the absolute perfect time for Netflix to announce a lower priced ($5-$7 per month) ad-supported tier (note to readers: feel free to let me know if I’m missing something colossally obvious that would negate my assertion).

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  • Weighing AVOD vs. SVOD Prospects During Virus

    With people spending more time at home due to the virus, there has been a ton of speculation around what impact this will have on streaming consumption. For example, based on prior disruptive incidents, Nielsen estimates viewing could increase 61%. WURL released data that it saw 7%-44% regional increases on its platform last weekend. A message I received yesterday from SpotX said its experienced a 16% increase in video ad inventory across their entire global marketplace. So the data suggests increases, the range of them is pretty wide.

    A sub-question within the “streaming is surging” speculation is how it affects AVOD vs. SVOD services. Even before the virus the dynamics in both categories were fluid. AVOD services are benefiting from multiple tailwinds: cord-cutting, CTV-based viewing, targeting, content proliferation, etc. SVOD services were proliferating, with new competitors like Disney+, Apple TV+, Peacock and soon HBO Max (Quibi could be included too, although its mobile-only). From my perspective, the new competition made incumbents like Netflix look vulnerable. I calculated there was a decent chance Netflix would actually lose subscribers in its US/Canada region in Q1, which would be unprecedented.

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  • Here’s the Math For How YouTube’s Total Revenue Could Exceed $25 Billion in 2020

    Finally, finally, finally, Google provided some transparency about YouTube’s financial condition, in its Q4 ’19 and full year 2019 earnings report yesterday. YouTube’s financials have been treated as a state secret by Google since the beginning of time, with only high level usage information periodically shared.

    Even yesterday’s reveal was only for YT’s advertising revenue, which came in at $4.7 billion for Q4 ’19 and $15.1 billion for the year. YT’s subscription revenues - which consist of YT Music, YT Premium includes YT Music) and YT TV (its virtual pay-TV service) - were buried in “Google other revenue.” On the earnings call, CEO Sundar Pichai said all YT subscriptions had a $3 billion annual run rate at the end of 2019.  

    Using some conservative assumptions and relatively quick math, it’s clear that YT’s total revenue could exceed $25 billion in 2020. As I also detail below, YT has to be considered among the best acquisitions in corporate America’s history. For Google, only the acquisition of Android (for the measly price of $50 million) could be considered more successful.

    Here are my calculations:

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  • VideoNuze Podcast #498: All the Reasons (and Math) For Why Netflix Will Get Squeezed in 2020

    I’m pleased to present the 498th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    On this week’s podcast, we do a deep dive into Netflix’s Q4 ’19 results (reported earlier this week), and what they imply for 2020. Colin mostly focuses his comments on the decelerating growth rate in international subscriber additions and the ARPU squeeze that’s coming this year.

    My focus is on the all-important domestic or “UCAN” (U.S. + Canada) region. Based solely on Netflix’s prior results and its own Q1 ’20 global subscriber addition forecast of 7 million, I think there’s at least a 50-50 chance Netflix will lose subscribers in UCAN in Q1 ’20. Just two years ago, this would have been an unimaginable thing to say; remember in Q1 ’18 it gained 2.28 million U.S. subscribers and in Q1 ’19 it gained 1.74 million.

    That’s all before talking about Q2 ’20 where it will almost certainly lose UCAN subscribers, at a multiple of the 130K it lost in Q2 ’19, given the new competitive landscape. Netflix really needs to launch a lower-priced ad-supported tier, but yet again Netflix management rejected the idea, this time for inexplicable reasons.

    Add it all up and Netflix is in for a bumpy ride in 2020. Meanwhile, since announcing its results on Tuesday after the market’s close, Netflix stock is up over $30 (about 10%, or around $15 billion extra market capitalization), once again proving that speculators simply can’t quit the stock regardless of the company’s actual performance or prospects.
     
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