Suits was the most streamed show across all platforms for three straight months this year, hitting the record for most-ever weeks at No. Scratch that - better than any show, period. After debuting on Netflix this summer, the 2011 legal drama (featuring the divorcée who saved a prince from the horrors of Buckingham Palace) performed better than any original Netflix show this year. One of its more creative moves this year was approaching NBCUniversal to buy the rights to Suits. In addition, Netflix has diversified its library with a mix of original and licensed content. content shortages), because while American actors and writers went on strike and TV series orders declined 25%, the foreign production gears kept grinding. The effect has been protection against supply chain interruptions (i.e. Discovery (a third) and Paramount (a quarter). More than half of Netflix’s scripted titles are being produced abroad. In the past two years, spending in Asia has increased to $2 billion and European investment has doubled. The company is shifting spending away from Hollywood and increasing investment in local-language productions. Netflix has invested heavily in diversification, in the form of international content. It’s a defensive strategy that limits your downside, even if it limits your upside.” I’d hate to hang with this guy, but he isn’t wrong. Its answer: “Diversification is the kevlar that protects you from fatal financial injuries. I asked ProfG.AI to explain the value of diversification. Over the past two decades the company has employed several simple but important business strategies that have endured. Would we be surprised if we found out the folks running the WGA/SAG-Aftra were covert assets working for the streaming giant? NETspionage if you will (couldn’t resist).Īnyway, Netflix’s strength in the face of the work stoppage was both a function of the strikers’ lack of long-term strategy and Netflix’s abundance of it. Put another way, investors don’t want the strikes to end. Analysts are even cautioning against too much optimism, as the “resolution of the writers’ strike will bring higher costs” and thus depress profits. Which means the multibillion-dollar windfall is a direct consequence of lower costs - that is, not having to spend $20 million per episode on The Witcher. Meanwhile, revenue is also up, but only slightly (8%). In addition to a 20% profit bump, the company is expected to generate $6.5 billion in free cash flow this year. Also, it helps to not be cable, because unlike news, late-night, and sitcoms, Ozark and Bridgerton aren’t perishable. The streamer was able to cut costs without materially affecting the user experience, as it already had a content library as deep as the Mariana Trench. My thesis: The strike would “force” a universal reduction in spending, while actually increasing the relative value of Netflix to consumers. Told You Soįive months ago I predicted the writers’ strike would do more to help Netflix than harm it. We’ve discussed entertainment’s woes at length this year, but Netflix has replaced Disney, Discovery, and Paramount on the content Iron Throne and boasts a market cap equal to all three combined. Think about it: a DVD-by-mail company turned internet platform turned Hollywood giant that would eventually join the same power acronym as Apple, Amazon, and Google. Since it delivered DVDs in envelopes, the company has defied the odds. However, rebounds are not new for Netflix. Fast-forward one circumnavigation of the Sun, and Wall Street is “gushing” over its “beautiful” results while the rest of the industry flounders. It was the worst performing stock in the S&P 500. For this post though, I’ll focus on Netflix, as its management has better hair, and they’re not mendacious fucks.Ī year ago, Netflix was losing 1 million subscribers per quarter and had shed 75% of its market cap. Over at Meta, revenue increased 24% and costs declined 7%, resulting in a doubling in profits. Meanwhile, the company is raising prices. The numbers were striking: NFLX profits hit $1.6 billion (up 20% from a year earlier) and the platform added 9 million new subscribers. Despite receiving scant coverage, the biggest business stories last week were Netflix and Meta’s quarterly earnings.
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