Hello everyone. The CY2Q23 earnings season covering April to June has officially begun. We kick things off in streaming land with Netflix. The update begins with Neil’s thoughts on Netflix’s earnings. The discussion then turns to why Neil doesn’t think Netflix will want to be compared to YouTube.

Netflix Earnings

Three months ago, the major takeaway from Netflix earnings was subscriber gains had returned at the potential risk of less attractive user economics (i.e. lower profitability per user). That major theme remained intact with Netflix’s 2Q23 earnings release.

As shown below, Netflix’s subscriber growth appears to be firmly back on track.

Netflix is back up to 18M new subs on a TTM basis. Although that’s roughly half of where growth was during the pandemic, it is up materially from the 2022 lows. This will likely alleviate concerns held by those who were disappointed at Netflix seemingly hitting a paid subscriber ceiling of 220M to 230M accounts.

Price cuts outside the U.S., the launch of an ad-supported tier in a number of countries, and to a lesser extent, the password sharing crackdown, are leading to renewed paid subscriber growth.

On the surface, strong subscriber growth is great news for Netflix. However, there are a few elements to the growth that caught my attention.

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