Netflix Earnings Report - Thread 2
The Content Thread
The Content Thread
1/ Let’s start with flashy headline:
This might be Netflix’s worst quarter for Original Content since early 2019!
This might be Netflix’s worst quarter for Original Content since early 2019!
2/ Here’s the outline of today’s thread. First, I’ll review the high level data for TV and Film.
Then I’ll focus on a few factoids that all indicate this was a bad quarter for content.
Then we’ll finish with the potential bright side for Netflix.
Then I’ll focus on a few factoids that all indicate this was a bad quarter for content.
Then we’ll finish with the potential bright side for Netflix.
3/ Before we get started, though, check out my #visual of the week for #Netflix. @netflix $NFLX
Some of you asked if Netflix has ever updated their "estimated" households. Well, yeah they have, and it's suspicious!
entertainmentstrategyguy.com/2021/07/21/how…
Some of you asked if Netflix has ever updated their "estimated" households. Well, yeah they have, and it's suspicious!
entertainmentstrategyguy.com/2021/07/21/how…
4/ Lastly, I'll use #datecdotes a lot in this thread. Explainer here.
entertainmentstrategyguy.com/2018/12/04/int…
entertainmentstrategyguy.com/2018/12/04/int…
/ First up, the summary of TV. I use three different visuals to capture this: 
/ continued
/ This data set is season datecdotes for any series with over 20M households. I’ve updated it from past looks to include both international and US series, but the trends are roughly the same.
/ This data set is season datecdotes for any series with over 20M households. I’ve updated it from past looks to include both international and US series, but the trends are roughly the same.
/ continued
/ So the trend lines are either flat in the case of raw totals, or down in terms of percentage of total subscribers. But there are a few reasons why I think this quarter really is one of the lower ones.
/ Some of these are “factoids”—verging close to cherry picking the data—but added together the picture seems pretty rough.
To start, here’s the number of TV series that made it into the “top 25”.
To start, here’s the number of TV series that made it into the “top 25”.
/ That’s not great, is it? Look at Q1 for comparisons, which put a whopping 5 series into the top 20. (Last quarter I had missed Who Killed Sara. Blorst for data mistakes.)
/ But see here’s the factoid that worries me: two of the series that premiered this quarter and got the datecdote treatment returned this quarter. Both had lower numbers.
Who Killed Sara: Q1= 55MM -->Q2=34MM
Lupin: Q1=76MM -->Q2=54MM
Who Killed Sara: Q1= 55MM -->Q2=34MM
Lupin: Q1=76MM -->Q2=54MM
/ Indeed, it seemed notable that this quarter Netflix was actually touting subsequent seasons that were down from previous seasons. In previous quarters, growth was the story, for example, with The Crown from S3 to S4.
/ So do you want a comparison of every Netflix TV datecdote that had two or more season data points? Here you go…
/ This ties into my larger theory that the key for any streamer is having TV series that “grow” over time. Each season powers more and more viewers.
/ Right now, Stranger Things and Money Heist have proven they can do that for Netflix. Bridgerton and The Witcher look like they will too.
Everything else? Unclear.
Everything else? Unclear.
/ But based on tracking subscriber numbers to content, it looks like Netflix needs these tentpoles to drive subscriber growth. Not having these this quarter hurt it.
/ Honestly, it is surprising to me that Netflix revealed that three of its big season 2 releases (or Part II of season 1 in some cases) dropped in viewership from just six months ago.
/ This is part of a trend, though. Because the #datecdotes were overall fairly anemic for Netflix.
Someone asked me if The Circle’s datecdote was bad at only 14 million. I said it was, but Netflix has lots of foreign titles that don’t do as well.
Someone asked me if The Circle’s datecdote was bad at only 14 million. I said it was, but Netflix has lots of foreign titles that don’t do as well.
/ So among US titles, how did it fair?
It’s the worst Netflix US TV datecdote of all time.
It’s the worst Netflix US TV datecdote of all time.
/ It gets worse: 3 of the four lowest US TV series by total datecdotes (The Sons of Sam, Too Hot To Handle season 2 and The Circle) took place this quarter.
Again. There are worse series for Netflix. But of their datecdotes--the best case they make to Wall Street--these are bad
Again. There are worse series for Netflix. But of their datecdotes--the best case they make to Wall Street--these are bad
/ One last bad trend. While TV had these lower numbers, the trend in film was a bit more positive. The caveat? This was the lowest number of film datecdotes for an entire quarter since Q1 of 2019…
/ One last bad trend. While TV had these lower numbers, the trend in film was a bit more positive. The caveat? This was the lowest number of film datecdotes for an entire quarter since Q1 of 2019…
/ This does though get to the one problem with all this analysis: it is so selective. Netflix could easily have added 2-3 film titles, and then the numbers would have come down.
On the TV side, I think Netflix could have added some popular titles and brought the numbers up.
On the TV side, I think Netflix could have added some popular titles and brought the numbers up.
/ Using Nielsen/FlixPatrol data’s as proxies for popularity, the biggest missing data point is Jupiter’s Legacy. The other one would have been Lucifer season 6.
/ On the licensed side, either Start Up or Manifest could have gotten a shout out, but I’m not sure if those are global titles.
And unless Netflix has an first run option for future seasons, it avoids touting the success of it’s licensed titles.
And unless Netflix has an first run option for future seasons, it avoids touting the success of it’s licensed titles.
/ On the film side, based on the Nielsen data, Netflix did pick their four biggest titles, but it would have been interesting to see what The Woman in the Window, Dog Gone Trouble, or Stowaway did in the ratings.
/ So what is the bright side for Netflix?
Well, this is probably as dark as it gets for Netflix. Last summer, lots of analysts took $NFLX at their word that Covid had no impact on their productions. This quarter and last show that, no, Netflix productions were delayed too.
Well, this is probably as dark as it gets for Netflix. Last summer, lots of analysts took $NFLX at their word that Covid had no impact on their productions. This quarter and last show that, no, Netflix productions were delayed too.
/ Does Q3 look better? Slightly.
Money Heist is a performer in every non-US territory. It will help with subscriber numbers in the EU.
After that, here’s Netflix’s quote about content:
Money Heist is a performer in every non-US territory. It will help with subscriber numbers in the EU.
After that, here’s Netflix’s quote about content:
/ Never Have I Ever S1 did 40M households in Q2 of 2020 (a big quarter for streaming period) and Sex Education S1 did 54M in Q1 of 2019. (We didn’t get a datecdote last year for season 2.) So do those move the needle? I don’t think so.
/ As for film, I try not to forecast film popularity more than four weeks out. Too speculative.
/ The bear case, though, continues to be that they just aren’t making enough Original hits to justify their content spend. Frankly, their original titles haven’t really replaced the licensed content leaving the platform.
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