Netflix is set to report first-quarter results Tuesday afternoon, setting the bar for a season of financial reports that will reveal a whole lot about the state of streaming.
The streaming king disappointed investors earlier in the year with a weak outlook on its future subscriber growth. “Conventional wisdom seems to have changed overnight,” and not just about Netflix, wrote Puck’s William D. Cohan after last reporting season. The point: There’s “a lot of excitement on Wall Street these days about the economics of streaming video.” Brian Wieser, global president of business intelligence at GroupM, called it a “reset” in an interview with The Guardian. In part, it’s an “acknowledgment that the economics of the streaming business aren’t as good as those of the traditional media business.” But he also said that Netflix remains “one of the most valuable media companies in the world,” which no one would dispute. So… how was the first quarter? Netflix shares are down 44% year-to-date, THR’s Georg Szalai wrote on Monday, “and few on Wall Street are expecting the streaming giant’s first-quarter subscribers and earnings report on Tuesday to come close to the current price.” will reverse investor gloom.”
With Wall Street “focused on increasing spending on original content amid intense competition in the streaming space,” he wrote, “Netflix appears to have to pull a rabbit out of its hat as part of its latest earnings report to bolster sentiment on a grand scale.” more likely, management will continue to prioritize streaming growth.”
>> Russia’s invasion of Ukraine is likely to show up in Netflix’s earnings call as the company has suspended its service in Russia, impacting its total subscriber count…
>> I’ll be listening to the call for guidance on Netflix’s experiments in charging for password sharing in Chile, Costa Rica and Peru…
The inflation factor
This new report from media consultancy Kantar relates to the UK but could easily apply elsewhere: Rising inflation “has forced many households to cut non-essential spending and subscriptions to video streaming platforms are firmly in the line of fire . wrote Anna Cooban for CNN Business. Per Kantar, “Brits canceled about 1.5 million subscriptions in the first three months of 2022, around 500,000 more than in the previous quarter. More than a third did so to save money…”
Lowry’s insight
Brian Lowry writes, “Netflix won’t come out on its results day with the Best Picture Oscar that the service has long coveted, but it’s clearly made enough headway in this competition to justify the strategy. The question, however, is what Netflix has been busy aiming for token wins without adequately addressing the pressures on its business model, especially as studios push content to their own streaming services, forcing Netflix to both spend more on content development than casting a wider net in terms of acquisition, too. The irony of this is that from the release of surprise hits like “Squid Game” to the under-the-radar shows that pop up, Netflix’s cultural footprint has never felt so large and trending – increasing the likelihood that the service could win a whole lot of battles and end up losing the war after all…”
Binge Times comes out on Tuesday
Perfect timing: On Tuesday, Deadline’s Dade Hayes and Reuters’ Dawn Chmielewski are releasing a major new book called Binge Times: Inside Hollywood’s Furious Billion-Dollar Battle to Take Down Netflix. The book “breaks down the absolute chaos of the streaming wars in a way even the casual industry observer can digest,” wrote reviewer Michael Malone. “It’s a thoroughly reported work that makes for engaging reading.” Deadline and Lit Hub have released excerpts…
Continue reading…
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