Netflix

[weijian]

For those who have 55mins to spare...a pretty good summary on Netflix and its future.

With capital markets starting to discipline companies who are used to losses (eg. Disney and Amazon in the streaming space), the future FCF generation capability of streaming might be interesting.

Ben Weiss - Netflix: The Original

Ben Weiss is the Chief Investment Officer of 8th & Jackson. We cover Netflix's tech advantages, the state of the streaming market, and where future cash flows are likely to come from.

https://www.joincolossus.com/episodes/99...e-original

[weijian]

Sounds like a good plan. Margins are expanded in 2 ways - First, one needs to pay another ~35-40% to add 1 more member. Secondly, to add member, one needs to upgrade away from their basic plans.

An Update on Sharing

Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub account for up to two people they don’t live with — each with a profile, personalized recommendations, login and password — for an extra CAD$7.99 a month per person in Canada, NZD$7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain

https://about.netflix.com/en/news/an-update-on-sharing

[weijian]

When Netflix first started out as a DVD seller and then renting them out, they stocked up enormous amount of inventory. To them, the cost of DVDs wasn't expensive inventory, it was inexpensive advertising - Cost of a DVD disc = 20 bucks. A reputation for having everything = priceless (Just like a Mastercard commercial)

So does it suggest that keeping a blind eye to password sharing was cheap CAC? (customer acquisition cost). Of course, Netflix is discretionary spending - one could easily unsubscribe and then subscribe back in future, still having the whole library at disposal. So in many ways, Netflix is getting more and more correlated to the general economy.

Netflix saw a spike in subscribers in the days following its password-sharing crackdown in the US.

Well, this might not come as a surprise, but Netflix’s password-sharing crackdown already appears to be working in the US. According to the data analytics company Antenna (via The Wall Street Journal), Netflix saw a huge spike in subscribers in the four days after it notified users about its paid sharing policies on May 23rd.

https://www.theverge.com/2023/6/9/237551...-crackdown

[weijian]

Netflix's traditional rivals were already behind on the international markets. Now they will be further behind, it seems.

Netflix uses Squid Game playbook for untapped South-east Asia

Netflix is ramping up local production in South-east Asia, aiming to boost its subscriber base in the populous region even as its US rivals are pulling back.

The Asia-Pacific region is currently the smallest market for Netflix, accounting for about 11 per cent of revenue in 2023. But a large, young demographic also presents a significant opportunity for growth.

Following the success of original shows from South Korea, such as Squid Game, and Japan’s pirate series One Piece, Netflix is adopting the playbook in Thailand, Indonesia and the Philippines.

https://www.straitstimes.com/business/ne...-east-asia

[weijian]

These guys are leaving their competition behind. To be honest, I have been surprised by their execution level to leave their competitors behind, in this "winner takes most" market. On one part, it was their superior execution and rightful focus (we are not a streaming or film company. We are in the attention business and anything that competes your attention is our competitor), but could we also suspect that their traditional rivals had little chance considering their baggage and missteps?

Netflix beats Q3 earnings targets with five million new customers

Netflix has been trying to shift investor attention away from subscriber sign-ups to other metrics, including revenue growth and profit margins. The company said its operating margin hit 30 per cent in the quarter, compared with 22 per cent a year earlier.

Nearly two years into its advertising business, Netflix is working to increase revenue from ad-supported plans but has said it does not expect advertising to become a primary growth driver until 2026.

Part of the plan centres around live events including sports, a big draw for advertisers. In November, Netflix will stream a fight between YouTube star Jake Paul and Mike Tyson, followed by its first NFL games in December.

https://www.businesstimes.com.sg/compani...-customers

[weijian]

I am glad that Netflix is wise enough to withdraw from the deal and concede to I got it from my Daddy Paramount. 

For those who had read "Barbarians at The Gate", for all we know, some IP might actually be available in a distressed sale in the future? Much of such IP are timeless and some of them actually get more valuable over time as well. The immediate winners are the merger arbs, deal makers and loan syndicators. And if I remember correctly, Netflix gonna get a few billions of compensation too.

Paramount Skydance wins Warner Bros; Netflix walks away and its shares jump

Netflix shares rose 10 per cent in extended trading.

“We have always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” Netflix said.

A Netflix adviser, speaking on condition of anonymity, said that they had advised the streaming service to bow out of the bidding because the deal no longer made economic sense. The adviser said that Netflix was bidding against a billionaire who signalled that he was willing to pay a price viewed as irrational for Warner Bros.

“There’s no point in playing chicken with someone who won’t turn the wheel,” said the source, referring to billionaire Larry Ellison, co-founder, executive chairman and chief technology officer of Oracle and father of Paramount CEO David Ellison.

The Ellison Trust is committing US$45.7 billion in equity, up from US$43.6 billion previously, backed by Larry Ellison and including any additional funds needed to satisfy Paramount’s bank solvency requirements, the firm said.

Bank of America Merrill Lynch, Citi and Apollo are providing US$57.5 billion in debt financing, increased from an earlier US$54 billion commitment.

Activist investor Ancora Holdings, which owns a small stake in Warner Bros, has also stepped up pressure on the HBO owner by saying the company did not adequately engage with Paramount.

https://www.businesstimes.com.sg/compani...hares-jump

P.S. "I got it from my Daddy" is the title of a short lived popular PSY song.

[EnSabahNur]

The interesting story going forwards, I think, is how PSKY will fare under David Ellison and how he enjoys (or not) the fruits of this victory



P.S. "I got it from my Daddy" is the title of a short lived popular PSY song


Good one. This made me lol

[weijian]

When Netflix first announced it was going to buy over Paramount in Dec2025 with part cash/part share, Mr Market didn't like it. Some well known fund mgrs like like Bill Ackman and Fundsmith have made their moves and bought into the company in 2026. It is interesting to see that current prices are ~10-15% lower than the price just before it cancelled the Paramount deal....

Netflix is great at making money – its problem is keeping viewers hooked

For the year, Netflix said, it expects revenue growth to be 13 per cent, roughly in line with its previous estimates. Shares fell nearly 6 per cent to US$64.66 in after-hours trading, with the stock having slipped more than 40 per cent in a year before the earnings report.

The company acknowledged the undercurrent that led to the recent tumult: concern about stagnating attention time on its service.

“There is no need for a fundamental shift in the strategy,” Ted Sarandos, a co-CEO of Netflix, added during an investor conference call after the earnings were announced. “We do need better execution in the US.”

The time that viewers spend on the service has stagnated, as YouTube and TikTok have increasingly become competition. Netflix has struggled to create a pipeline of new hits to replace shows such as Stranger Things and Squid Game.

Alongside last week’s retrenchments of about 6 per cent of its employees, Netflix also cut high profile film and television executives. Notably, it replaced chief creative officer Bela Bajaria and said film chief Dan Lin was departing, signs that it is resetting its programming strategy.

Earlier in 2026, Netflix lost a bidding war for Warner Bros Discovery and its rich library of characters, which was sold to David Ellison-led Skydance. Some analysts believe Netflix could go after other acquisition targets such as NBCUniversal after Comcast spins it off.

Netflix has posted monthly subscriber losses in the US throughout 2026, with no net additions reported for any month up to September, data from analytics firm Antenna showed. Antenna tracks US subscription purchases via sources like credit card transactions, but excludes subscriptions acquired through wholesale bundles. A Netflix spokesperson said the Antenna data were “not representative of Netflix’s business performance”. NYTIMES, REUTERS

https://www.businesstimes.com.sg/compani...ers-hooked