WEBVTT - Geetha Ranganathan on Netflix Earnings (Audio)

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<v Speaker 1>All right, well, we're going to one of our top stories.

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<v Speaker 1>It's Netflix. It is growing again and as a result,

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<v Speaker 1>perhaps Hollywood can breathe sigh of relief for can it

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<v Speaker 1>joining us now to discuss the earnings. Is that geta wrong?

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<v Speaker 1>And Nathan Bloom Big Intelligence, techn media and less so

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<v Speaker 1>thanks so for joining us, give us an overview first

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<v Speaker 1>of all of what the Netflix said. Yeah, absolutely, and

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<v Speaker 1>thank you so much for having me so that you know,

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<v Speaker 1>this was the first quarter where we kind of saw

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<v Speaker 1>this reversal of of that subscriber slowdown, if you will.

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<v Speaker 1>So they returned to subscriber growth. That's a huge positive. Um.

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<v Speaker 1>You know, there's always been this concern about after they

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<v Speaker 1>came out with those really weak numbers uh in the

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<v Speaker 1>first half, whether this was kind of the beginning of

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<v Speaker 1>the end for the streaming story, and it looks like

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<v Speaker 1>it's not. They still have some growth levels left, uh.

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<v Speaker 1>And we not only saw that with the three Q numbers,

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<v Speaker 1>but we also saw a pretty encouraging four Q guidance

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<v Speaker 1>kind of coming slightly above consensus. And remember that they

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<v Speaker 1>haven't really factored in any of the upside that they

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<v Speaker 1>potentially could get from that new advertising tier. That they're

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<v Speaker 1>about to debut. So I think there's a lot of

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<v Speaker 1>optimism that's built into this report. Yeah, it was interesting

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<v Speaker 1>that they mentioned that that wasn't really tied to that,

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<v Speaker 1>so that may be coming. So obviously a lot to

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<v Speaker 1>like here. I wanted to bring up one possible negative

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<v Speaker 1>and I know you'll address it well. Um, some naysayers

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<v Speaker 1>say that this plan by Netflix to stop giving the

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<v Speaker 1>subscriber numbers it doesn't look good. I mean, normally, if

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<v Speaker 1>you've got great numbers, you like to to spread them

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<v Speaker 1>out there. I know that there are Apple references that

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<v Speaker 1>you know, they stopped giving numbers on the sale of

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<v Speaker 1>individual iPhones and that didn't really hurt. But still some

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<v Speaker 1>people will will look askance at this. Yeah, you know,

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<v Speaker 1>I think it is an admission, uh in some ways

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<v Speaker 1>that this is no longer a subscriber story. I mean,

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<v Speaker 1>this was for for the past fifteen years. It has

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<v Speaker 1>completely just driven off of that one metric, right, subscriber numbers.

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<v Speaker 1>But now we've reached a point in the model where

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<v Speaker 1>it's really kind of uh saturated it if you will,

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<v Speaker 1>it's it's going to be somewhat of a low growth model.

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<v Speaker 1>And so there has been kind of this recalibration across

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<v Speaker 1>the streaming industry not to have too much of this

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<v Speaker 1>hyper focus on subscribers and and instead move to the

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<v Speaker 1>metrics that really matter, which are the financial metrics, because

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<v Speaker 1>at the end of the day, you could have millions

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<v Speaker 1>of subscribers, but you could be still losing money, which

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<v Speaker 1>is exactly what we've seen with so many of these

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<v Speaker 1>streaming stories. And so this is kind of an uh

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<v Speaker 1>you know again, an admission that we have to kind

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<v Speaker 1>of move to those profitability metrics, to to more of

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<v Speaker 1>the financial metrics, to more of the end game end

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<v Speaker 1>unit economics. And so, yes, there there is going to

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<v Speaker 1>be a lot of volatility in their subscriber numbers, and

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<v Speaker 1>they kind of want to avoid that drama quadrant and

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<v Speaker 1>quarter out. I guess I want to look at the

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<v Speaker 1>other side of all this, if you will, you look

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<v Speaker 1>at the amount of the landscape for Netflix, and there's

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<v Speaker 1>a huge amount of competition now with the HBO, obviously,

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<v Speaker 1>Disney Plus and a variety of others. Is it to

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<v Speaker 1>be the owner of the platform or is it better

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<v Speaker 1>to be somebody who's making uh content and selling it

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<v Speaker 1>into the various contents As a company like Sony for instance.

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<v Speaker 1>That's a great question. Uh, you know, there's always been

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<v Speaker 1>this big debate about you know, is it better to

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<v Speaker 1>be the content owner, is it better to be the distributor.

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<v Speaker 1>It's good to be both if you can, which is

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<v Speaker 1>exactly what Netflix has become. Right. They were originally this

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<v Speaker 1>just this distributor of you know, second run content, right,

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<v Speaker 1>just old TV shows, old movies, and then they finally

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<v Speaker 1>made that big switch into making their own original content

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<v Speaker 1>and now they're one of the biggest content producers in

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<v Speaker 1>the world. So ideally you do need to have a

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<v Speaker 1>great distribution mechanism, which they have kind of built. But

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<v Speaker 1>at the end of the day, it is content that

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<v Speaker 1>kind of feeds that beast. So it's good to have both,

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<v Speaker 1>but I still give the edge to content. And they're

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<v Speaker 1>really tapping into I mean, we look at these big

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<v Speaker 1>numbers in Asia, they're tapping into non English language shows.

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<v Speaker 1>Extraordinary Attorney Woo was one. It's a favorite in our household,

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<v Speaker 1>but there's so many other ones, and they seem to

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<v Speaker 1>be connecting with with these production houses in a lot

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<v Speaker 1>of different countries. Oh. Absolutely, And as you pointed out,

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<v Speaker 1>there are so many titles local language titles that are

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<v Speaker 1>resonating so well, not just in those markets, but across

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<v Speaker 1>the globe. I mean A Squid Game was the greatest

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<v Speaker 1>example of this last year, and as you just brought up,

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<v Speaker 1>you know, the the other Korean title this quarter as well,

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<v Speaker 1>and we're seeing them invest more and more in those

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<v Speaker 1>local language titles. Remember that not only helps them kind

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<v Speaker 1>of diversify their genre, diversify their uh, you know, title,

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<v Speaker 1>their slate, but it's also much lower cost to produce

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<v Speaker 1>a lot of these these titles compared to you know,

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<v Speaker 1>some of the English speaking content. So all in all,

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<v Speaker 1>I think it's it's a great win win. When it

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<v Speaker 1>comes to advertising, though, they're going to be presumably taking

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<v Speaker 1>on the same sort of pool of resources or money

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<v Speaker 1>on ad spend for linear television surely. Yeah, they are

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<v Speaker 1>looking to kind of get to to kind of tap

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<v Speaker 1>into that whole linear television market in the In the

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<v Speaker 1>US this is about you know, a sixty sixty five

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<v Speaker 1>billion dollar market. Globally it's about a two billion dollar market.

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<v Speaker 1>So they are banking on the fact that as those

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<v Speaker 1>eyeballs kind of move away from TV, you know, more

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<v Speaker 1>and more people are going to spend money on on

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<v Speaker 1>Digital at Platforms Guita, thanks so much for joining us.

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<v Speaker 1>Excellent insights as usual Gita rung Enough and Bloomberg Intelligence,

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<v Speaker 1>tech and media analyst