Speaker 1: All right, well, we're going to one of our top stories.
Speaker 1: It's Netflix. It is growing again and as a result,
Speaker 1: perhaps Hollywood can breathe sigh of relief for can it
Speaker 1: joining us now to discuss the earnings. Is that geta wrong?
Speaker 1: And Nathan Bloom Big Intelligence, techn media and less so
Speaker 1: thanks so for joining us, give us an overview first
Speaker 1: of all of what the Netflix said. Yeah, absolutely, and
Speaker 1: thank you so much for having me so that you know,
Speaker 1: this was the first quarter where we kind of saw
Speaker 1: this reversal of of that subscriber slowdown, if you will.
Speaker 1: So they returned to subscriber growth. That's a huge positive. Um.
Speaker 1: You know, there's always been this concern about after they
Speaker 1: came out with those really weak numbers uh in the
Speaker 1: first half, whether this was kind of the beginning of
Speaker 1: the end for the streaming story, and it looks like
Speaker 1: it's not. They still have some growth levels left, uh.
Speaker 1: And we not only saw that with the three Q numbers,
Speaker 1: but we also saw a pretty encouraging four Q guidance
Speaker 1: kind of coming slightly above consensus. And remember that they
Speaker 1: haven't really factored in any of the upside that they
Speaker 1: potentially could get from that new advertising tier. That they're
Speaker 1: about to debut. So I think there's a lot of
Speaker 1: optimism that's built into this report. Yeah, it was interesting
Speaker 1: that they mentioned that that wasn't really tied to that,
Speaker 1: so that may be coming. So obviously a lot to
Speaker 1: like here. I wanted to bring up one possible negative
Speaker 1: and I know you'll address it well. Um, some naysayers
Speaker 1: say that this plan by Netflix to stop giving the
Speaker 1: subscriber numbers it doesn't look good. I mean, normally, if
Speaker 1: you've got great numbers, you like to to spread them
Speaker 1: out there. I know that there are Apple references that
Speaker 1: you know, they stopped giving numbers on the sale of
Speaker 1: individual iPhones and that didn't really hurt. But still some
Speaker 1: people will will look askance at this. Yeah, you know,
Speaker 1: I think it is an admission, uh in some ways
Speaker 1: that this is no longer a subscriber story. I mean,
Speaker 1: this was for for the past fifteen years. It has
Speaker 1: completely just driven off of that one metric, right, subscriber numbers.
Speaker 1: But now we've reached a point in the model where
Speaker 1: it's really kind of uh saturated it if you will,
Speaker 1: it's it's going to be somewhat of a low growth model.
Speaker 1: And so there has been kind of this recalibration across
Speaker 1: the streaming industry not to have too much of this
Speaker 1: hyper focus on subscribers and and instead move to the
Speaker 1: metrics that really matter, which are the financial metrics, because
Speaker 1: at the end of the day, you could have millions
Speaker 1: of subscribers, but you could be still losing money, which
Speaker 1: is exactly what we've seen with so many of these
Speaker 1: streaming stories. And so this is kind of an uh
Speaker 1: you know again, an admission that we have to kind
Speaker 1: of move to those profitability metrics, to to more of
Speaker 1: the financial metrics, to more of the end game end
Speaker 1: unit economics. And so, yes, there there is going to
Speaker 1: be a lot of volatility in their subscriber numbers, and
Speaker 1: they kind of want to avoid that drama quadrant and
Speaker 1: quarter out. I guess I want to look at the
Speaker 1: other side of all this, if you will, you look
Speaker 1: at the amount of the landscape for Netflix, and there's
Speaker 1: a huge amount of competition now with the HBO, obviously,
Speaker 1: Disney Plus and a variety of others. Is it to
Speaker 1: be the owner of the platform or is it better
Speaker 1: to be somebody who's making uh content and selling it
Speaker 1: into the various contents As a company like Sony for instance.
Speaker 1: That's a great question. Uh, you know, there's always been
Speaker 1: this big debate about you know, is it better to
Speaker 1: be the content owner, is it better to be the distributor.
Speaker 1: It's good to be both if you can, which is
Speaker 1: exactly what Netflix has become. Right. They were originally this
Speaker 1: just this distributor of you know, second run content, right,
Speaker 1: just old TV shows, old movies, and then they finally
Speaker 1: made that big switch into making their own original content
Speaker 1: and now they're one of the biggest content producers in
Speaker 1: the world. So ideally you do need to have a
Speaker 1: great distribution mechanism, which they have kind of built. But
Speaker 1: at the end of the day, it is content that
Speaker 1: kind of feeds that beast. So it's good to have both,
Speaker 1: but I still give the edge to content. And they're
Speaker 1: really tapping into I mean, we look at these big
Speaker 1: numbers in Asia, they're tapping into non English language shows.
Speaker 1: Extraordinary Attorney Woo was one. It's a favorite in our household,
Speaker 1: but there's so many other ones, and they seem to
Speaker 1: be connecting with with these production houses in a lot
Speaker 1: of different countries. Oh. Absolutely, And as you pointed out,
Speaker 1: there are so many titles local language titles that are
Speaker 1: resonating so well, not just in those markets, but across
Speaker 1: the globe. I mean A Squid Game was the greatest
Speaker 1: example of this last year, and as you just brought up,
Speaker 1: you know, the the other Korean title this quarter as well,
Speaker 1: and we're seeing them invest more and more in those
Speaker 1: local language titles. Remember that not only helps them kind
Speaker 1: of diversify their genre, diversify their uh, you know, title,
Speaker 1: their slate, but it's also much lower cost to produce
Speaker 1: a lot of these these titles compared to you know,
Speaker 1: some of the English speaking content. So all in all,
Speaker 1: I think it's it's a great win win. When it
Speaker 1: comes to advertising, though, they're going to be presumably taking
Speaker 1: on the same sort of pool of resources or money
Speaker 1: on ad spend for linear television surely. Yeah, they are
Speaker 1: looking to kind of get to to kind of tap
Speaker 1: into that whole linear television market in the In the
Speaker 1: US this is about you know, a sixty sixty five
Speaker 1: billion dollar market. Globally it's about a two billion dollar market.
Speaker 1: So they are banking on the fact that as those
Speaker 1: eyeballs kind of move away from TV, you know, more
Speaker 1: and more people are going to spend money on on
Speaker 1: Digital at Platforms Guita, thanks so much for joining us.
Speaker 1: Excellent insights as usual Gita rung Enough and Bloomberg Intelligence,
Speaker 1: tech and media analyst