Netflix 4Q23 Earnings, Netflix Buys Rights for WWE Raw, Spatial F1 Racing on Apple Vision Pro

Some weeks, the news flow comes together in such a way as to result in a fun conversation at the end of the week covering several related topics. We will do that in today’s update. The update will begin with Netflix earnings, turn to Netflix getting into live sports/entertainment, and then conclude with a closer look at an intriguing concept for live sports consumption on Vision Pro.

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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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Netflix Slashes Pricing in Dozens of Countries, YouTube’s Market Positioning (Daily Update)

Hello everyone. We begin with Neil’s thoughts on Netflix cutting prices in more than 100 territories. It is quite the surprising development. The discussion then turns to YouTube and where the streaming service sits in the broader video streaming industry. Will YouTube’s market positioning shift with the company moving deeper into paid video? Will YouTube run into user resistance as it looks to evolve beyond being a source of free, ad-supported content?

Let’s jump right in.

Netflix Slashes Pricing in Dozens of Countries

A long-term trend in paid video streaming has been higher pricing. We can go so far as to say price increases were the big trend in 2022 as companies prioritized revenue and profitability.

As a sign of how the streaming industry is far from settled, Netflix is trying something new in 2023. Here’s the WSJ:

“Netflix Inc. has reduced the cost of its service in more than three dozen countries in recent weeks, as it tries to appeal to customers around the world who have an ever-growing list of streaming options.

The streaming company’s recent price cuts span Middle Eastern countries including Yemen, Jordan, Libya and Iran; sub-Saharan African markets including Kenya; and European countries such as Croatia, Slovenia and Bulgaria.

In Latin America, nations including Nicaragua, Ecuador, and Venezuela have seen reductions in subscription costs, as have parts of Asia including Malaysia, Indonesia, Thailand and the Philippines.

The cuts apply to certain tiers of Netflix in those markets—in some cases halving the cost of a subscription.”

This is a surprising development. It is the opposite of what Netflix management talked about on its most recent earnings call. While management teams are not obliged to follow product strategy discussed on earnings calls, the breadth and magnitude of these price cuts strongly support the view of a strategy shift being in play.

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Netflix 3Q22 Earnings, Netflix Wants a New Narrative, Netflix's ARPU Mission (Daily Update)

Hello everyone.

We are going to talk more about the iPad line tomorrow. There are a growing number of questions as to what Apple announced (and didn’t announce) yesterday regarding the iPad. We will go over where I think Apple may take the iPad line from here.

Today’s update will be dedicated to Netflix earnings. As the company with the most paid subs in video land, at least until Disney provides its updated subscriber total, Netflix results can provide insights as to how the paid video industry is evolving.

Let’s jump right in.

Netflix 3Q22 Earnings

Netflix successfully played Wall Street's expectations game. The 3Q22 paid subscriber guidance that management gave three months ago was very weak. Management was essentially calling for no subscriber growth on a global basis (+1.0M) despite having a strong quarter from a video content perspective.

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