It’s been awhile since I’ve done a “Deep Thoughts with Anthony Pizzuto” segment. I’ve been so busy turning my deep thoughts into geek thoughts that I haven’t had time to blog on the things that are happening in the business world today. Fortunately for you and me, something fun happened today that inspired me to brush off the deep thoughts logo and blog away.
Ladies and gents, I present to you the Netflix earnings call!
The stock tumbled about 14% today in after hours trading as it shared news that the estimated 1.23M subscriber growth they anticipated for the quarter only came in at 674K (yes, half). This is the first time in five quarters the streaming giant has missed their projections.
To add insult on to injury, the company also missed their revenue targets.
This is a very interesting turn of events, but not necessarily unexpected. Here are some “deep thoughts” on the subject:
At one time, Netflix was the only game (well almost) in town when it came to streaming media. Fortunately for those who want options, the world changed, and streaming became the bubble that the internet was back in the late 90s. Streaming content is the thing. With competition from Amazon, Hulu, iTunes, and myriad networks (CBS All Access, FX, HGTV, ABC, etc. etc.) – compounded by the to be launched DC/Warner Brothers streaming service and the Disney Streaming service – there’s no lack of content venues for the consumer. Damn the fool who thought cord cutting from cable and going the Netflix route would change your financial situation. According to a study done by Deloitte, 55% of U.S. households subscribe to at least one video-streaming service, up from 10% in 2009. Additionally, the average subscriber actually pays for three different services generating almost $2.1B per month in revenue.
Netflix Originals aren’t enough
Netflix is slated to spend $8B on original programming this year, equating to 700 series/movies. That’s more than most studios and production companies produce in their entire existence. And while original programming is a better financial move for Netflix (they own the full supply chain), is the programming good enough to capture new subscribers? When was the last time you got excited about a Netflix original? Yeah Stranger Things was fun the first time, and then they effed it up for a second season. Orange is the New Black jumped the shark a season or two ago. I believe, the lack of new theatrical releases is one of the biggest turn-offs from Netflix. I’d rather pay $99 a year for Amazon Prime, get some great program and the ability to rent a new release, versus waiting another six months for it to appear on Netflix. I will say though Netflix has gotten a wee bit better with getting new releases on their platform. I almost fell out of my seat when I saw Star Wars: The Last Jedi in their catalogue late last month.
Reverse cord cutting
Is it possible that cord cutting has backfired on us, and with the plethora of streaming services we have available to us – we are finding ourselves back at square one? Are we turning into “stream breakers” as we’re now overloaded with options and cross over that we really don’t need three streaming subscriptions? I’ll be honest, with the exception of GLOW, I haven’t watched anything on Netflix in awhile. Mostly because I’m obsessed with Handmaid’s Tale and Marvelous Mrs. Maisel (I heart Rachel Brosnahan).
Like I mentioned earlier, I’m beginning to wonder if we’re in the streaming bubble and there’s about to be a big… loud… POP. How many more platforms can we handle? How many more subscriptions does the average household need?
My biggest question? Does anyone go outside anymore? Hrm…