Los Angeles
CNN
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Netflix seems to be in a dominant place in Hollywood’s battle for eyeballs and advert {dollars}.
To this point, Netflix stays one of many solely profitable main streaming providers, and buyers appear to be ok with the corporate’s prospects: Netflix’s inventory is up 36% in comparison with one 12 months in the past, whereas Disney’s inventory fell 10%, and Warner Bros. Discovery’s inventory is down 22% over the identical interval (WBD is CNN’s mother or father firm).
As soon as thought-about an upstart disruptor in Hollywood, Netflix has been the highest canine in streaming for greater than a decade. Final week, Financial institution of America topped the streaming service “the king in streaming.”
“It has turn out to be more and more clear that Netflix has received the ‘streaming wars,’” wrote Financial institution of America media analyst Jessica Reif Ehrlich, pointing to the truth that legacy media firms, like Disney, at the moment are reevaluating the cash they’ve poured into their very own streaming methods.
However the query of whether or not Netflix’s dominance can carry into 2024 stays. The corporate reviews fourth-quarter earnings on Tuesday after the bell, offering key insights into its monetary well being.
Netflix, which is in a quiet interval forward of earnings, declined CNN’s request for remark.
Right here’s what to look out for:
Solely 5 years in the past, Netflix co-founder Reed Hastings blasted promoting as “exploiting customers.” Since then, Netflix has modified its tune, launching a “Basic with Ads” subscription tier in November 2022.
The plan is considerably cheaper than Netflix’s ad-free choices, at $6.99 monthly within the US. In October, Netflix stated it raised the price of its premium ad-free plan to $22.99 whereas its one-stream primary plan rose to $11.99.
A rising share of customers appear to be signing up for the cheaper possibility. Earlier this month, Amy Reinhard, Netflix’s president of promoting, stated Netflix’s advert tier hit more than 23 million month-to-month lively customers.
Final 12 months, Netflix started cracking down on password sharing worldwide. That transfer has to this point confirmed profitable, boosting new subscriber signups and probably inspiring different streaming providers to implement their very own crackdowns.
Reif Ehrlich estimates that Netflix’s crackdown could have pushed some password “debtors” onto Netflix’s least expensive ad-supported subscription tier, fueling its development.
Total, Wall Avenue is anticipating Netflix so as to add 6 million international web paid subscribers, in accordance with knowledge from FactSet.
Final 12 months was tumultuous for the leisure business as writers and actors went on strike concurrently for a number of months for the primary time since 1960.
Netflix, nonetheless, has just lately made investments in ventures outdoors of scripted programming, betting on stay programming and video video games.
The corporate’s fourth-quarter outcomes would possibly present whether or not these efforts are paying off.
In November, Netflix aired its first-ever stay sports activities occasion, and its third-ever foray into stay programming, known as “The Netflix Cup,” a crossover competitors between Components 1 drivers {and professional} golfers.
“We’re investing closely in growing our stay capabilities,” Netflix co-CEO Ted Sarandos stated on the corporate’s earnings name in October.
On Tuesday, Netflix revealed its largest funding into stay programming but. The streaming service acquired the exclusive rights to “WWE Uncooked,” at the moment seen on Comcast’s USA cable community. The ten-year deal is valued at greater than $5 billion, in accordance with a submitting from TKO Group Holdings, the mother or father firm of WWE. The present will start streaming stay on Netflix in January 2025.
In late February, the corporate can even stream the thirtieth Annual Screen Actors Guild Awards stay.
The fourth quarter additionally noticed an enormous enlargement in Netflix’s video game offering. In December, Netflix launched three mobile-friendly video games from Grand Theft Auto, one of many best-selling video-game franchises of all time.
On the corporate’s final earnings name, co-CEO Greg Peters stated investments in gaming might assist draw new subscribers.
“From a strategic perspective, we consider we will construct video games into a robust content material class, leveraging our present movies and collection,” Peters stated.
Nevertheless, there stays the query of whether or not these investments will turn out to be large income drivers for the corporate, stated Matthew Harrigan, a media analyst at Benchmark.
“Video video games are a tough enterprise, I feel they’ve really executed a reasonably good job there,” he stated. “Nevertheless it actually isn’t something that’s transformational for the enterprise.”
Netflix’s fourth-quarter earnings report might present key perception into the corporate’s authentic programming technique.
This 12 months, the corporate will see a shakeup in its movie division. On Monday, Scott Stuber, Netflix’s international movie chairman who helped construct the corporate’s powerhouse film studio, introduced he plans to go away the corporate in March.
However even earlier than the announcement, the variety of reveals and authentic programming Netflix churned out had already hit its peak, in accordance with knowledge analyzed by MoffettNathanson. Since 2022, Netflix’s content material mill has slowed, although it stays to be seen whether or not that development continues in 2024.
Netflix noticed the most important decline in new movie and TV launched in the course of the fourth quarter in comparison with different main streaming opponents like Amazon Prime, Hulu, Disney+, Max, Peacock and Paramount+, in accordance with the information.
And whereas Netflix’s tempo of releasing original programming declined, time spent viewing content material Netflix borrowed from its opponents went up.
In line with MoffettNathanson, to start out 2023, solely 7% of view time on Netflix was pushed by licensed reveals owned by opponents (for instance: Fits and The Workplace). All through final 12 months, although, that quantity steadily rose. Eighteen % of view time in November and 16% of view time in December have been spent consuming reveals and flicks that have been licensed from different firms on the platform.
Harrigan stated reducing again on originals signifies that Netflix could also be making an attempt to turn out to be extra cost-disciplined and efficient, although it might finally backfire.
“Generally they’ve simply been plain fortunate with hits,” Harrigan stated. “Whenever you crank out amount, typically by advantage of the leisure enterprise, you get an unlikely hit. When you’re making an attempt to have budgetary constraints, you don’t get that hit.”