Neil Cybart 10/23/23 Neil Cybart 10/23/23

Netflix’s Jam-Packed Earnings, The Dramatic Turn In Netflix’s Content Spend, Wall Street Helps Netflix

Hello everyone. Welcome to a new week. We kick off our 3Q23 earnings season coverage with Netflix. As one of the first companies to report, the company will set the tone for what are the latest trends in the paid and ad-supported video streaming space. Let's jump right in.

Netflix’s Jam-Packed Earnings

There was a lot of information and updates stuffed into Netflix’s 3Q23 earnings. The overall theme: Change is in the air.

Consider the following news:

Licensing. In what may come as a surprise, Netflix is once again talking up licensed content. The company put a lot of attention on “Suits.” The show’s popularity, despite the fact that it was released in 2011 and did not even have its final season available on Netflix, boils down to Netflix pushing it in front of a lot of its subscribers. In my view, it’s a sign of how many Netflix subscribers just want something to keep them entertained. It doesn’t have to be new content. Licensing is a relatively easy way for Netflix to keep engagement going (124 43-minute episodes across eight seasons is A LOT of content) while also being financially attractive in comparison to original programming associated with larger up-front costs.
Sports. Netflix is apparently now the “go-to place for anyone excited by the drama of sport…” Here’s a longer quote from co-CEO Ted Sarandos: “We are in the sports business, but we're in the part of the sports business that we bring the most value to, which is the drama of sport.” This comes across as spin to me. Netflix is now playing in sports because they have a few sports movies? Hmm. Meanwhile, Netflix will be airing

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Neil Cybart 1/23/23 Neil Cybart 1/23/23

Netflix Earnings, Reed Hastings Steps Down as co-CEO, Netflix Partners With Nike Training Club (Daily Update)

Hello everyone. One item on the agenda this week is to look ahead at Apple’s 2023 in terms of opportunities and challenges. For today’s update, we will examine Netflix’s earnings published last week. 4Q22 earnings season has arrived. The discussion will include Neil’s thoughts on Reed Hastings stepping down as Netflix co-CEO. Let’s jump right in.

Netflix Earnings

Last Thursday, Netflix reported CY4Q22 results. Paid subscriber results (+7.7M) beat management’s guidance of +4.5M.

Looking through the granular results by operating segments, there were no major changes on the subscriber front. As shown below in the following exhibit which tracks Netflix paid net streaming subscriber additions on a TTM, the trend continues to be down except for a slight bump higher in Latin America. Given Netflix's very weak first half of 2022, management's guidance commentary for modest subscriber growth in 1Q23 would lead to stabilization in new user growth on a TTM basis.