Investors await Netflix revenue while scrutinizing streaming business model

Netflix will release its first quarter results on Tuesday afternoon, setting the bar for a season of financial reporting that will reveal a lot about the state of streaming.

The king of streaming disappointed investors earlier this year with dim prospects for future subscriber growth. ‘Conventional wisdom seems to have changed overnight’, and not just about Netflix, Puck’s William D. Cohan wrote after the last earnings season. The point: There’s “a lot of fuss on Wall Street these days over the streaming video economy.”
Brian Wieser, Global President of Business Intelligence at GroupM, called it a “reset” in an interview with The Guardian. In part, he said, it’s “an acknowledgment that the economics of the streaming business aren’t as good as those of the traditional media business.” But he also said that Netflix remains “one of the most valuable media companies on Earth”, which no one would dispute. So… how was the first trimester?
Netflix shares are down 44% year-to-date, THR’s Georg Szalai wrote on Monday“and few on Wall Street expect the streaming giant’s first-quarter subscriber and earnings report on Tuesday to turn the currently gloomy mood among investors.”

As Wall Street focuses “on increasing spending on original content amid intense competition in the streaming space,” he wrote, “Netflix seems to need to pull a rabbit out of its hat in However, it is more likely that management will continue to emphasize the theme of continued growth as part of its latest earnings report to change the mood in a big way.

>> Russia’s invasion of Ukraine will likely come up in Netflix’s earnings call, as the company has suspended service in Russia, impacting its total subscriber count…

>> I’ll listen to the call for advice on Netflix’s experiences with password sharing billing in Chile, Costa Rica, and Peru…

The inflation factor

This new report from media consultancy Kantar concerns the UK, but could easily be applied to other countries: soaring inflation “has forced many households to cut back on non-essential spending, and Subscriptions to video streaming platforms are firmly in sight,” Anna Cooban wrote for CNN Business. According to Kantar, “Britons canceled around 1.5 million season tickets in the first three months of 2022, up around 500,000 from the previous quarter. More than a third did so to save money. the money…”

Lowry’s Insight

Brian Lowry writes: “Netflix won’t show up on earnings day with the best picture Oscar the service has long coveted, but it’s clearly made enough inroads in this competition to justify the strategy. Still, the question is whether in how busy Netflix has been pursuing what amounts to token victories without adequately responding to pressures on its business model, especially as studios funnel content to their own streaming services, forcing Netflix both to spending more on developing content and expanding its network in terms of acquisition.The irony is that Netflix’s cultural footprint has never felt bigger – from launching surprise hits like “Squid Game” to shows under radar that burst and strain – increasing the possibility that the service could win many battles and still end up losing the war…”

“Binge Times” comes out on Tuesday

Perfect timing: On Tuesday, Deadline’s Dade Hayes and Reuters’ Dawn Chmielewski release a great new book titled “Binge Times: Inside Hollywood’s Furious Billion-Dollar Battle to Take Down Netflix.” The book “breaks down the utter chaos of the streaming wars in a way that even a casual industry watcher can stomach”, criticizes Michael Malone wrote. “It’s a well-researched piece of work that makes for compelling reading.” Deadline and Illuminated Hub published excerpts…

Further reading…

— Is this Netflix’s new way of developing content, combining games and shows? “Netflix is ​​doubling down on games with the upcoming launch of a mobile game Exploding Kittens and a cartoon series…” (VentureBeat)
— Latest from Gerry Smith: “Jon Stewart’s struggles add to list of streaming talk show failures…” (Bloomberg)
— After a two-year ban due to Covid, character hugs are back at Disneyland. Brooks Barnes traveled to Anaheim to document the moment… (NYT)
— “Paramount Global has agreed to pay $14.75 million to shareholders of the former CBS Corp in a proposed class action lawsuit alleging that the company’s failure to disclose allegations of sexual misconduct against the former CBS CEO Leslie Moonves artificially inflated the value of his stock…” (Reuters)