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State of the Screens

Audiences Liked Netflix More Than Wall Street

By January 27, 2022February 23rd, 2022No Comments

2022-01-26_17-18-09

Big news: Netflix spooked Wall Street with lower-than-expected subscriber growth numbers.  The stock got hammered and has fallen ≈ 45% (↓ ≈ $160B in market cap) from a high of ≈ $700/share in mid-November.

Netflix subscribers (YoY growth):
1) 
2007 – 7.5M
2) 
2008 – 9.4M (↑ 26%)
3) 
2009 – 12.3M (↑ 31%)
4) 2010 – 20.0M (↑ 63%)
5) 
2011 – 23.5M (↑ 18%)
6) 
2012 – 33.3M (↑ 41%)
7) 2013 – 44.4M (↑ 33%)
8) 2014 – 57.4M (↑ 29%
9) 
2015 – 74.8M (↑ 30%)
10) 
2016 – 93.8M (↑ 25%)
11) 2017 – 110.6M (↑ 18%)
12) 
2018 – 139.3M (↑ 26%)
13) 
2019 – 167.1M (↑ 20%)
14) 2020 – 203.7M (↑ 22%)
15) 2021 – 221.8M (↑ 9%)

35B6A.1-2021
Netflix subscribers (% of total):
1) 
International – 146.6M (66%)
2) U.S./Canada – 75.2M (34%)
3) Total – 221.8M

Estimated U.S. content spend for Netflix (YoY growth) according to Wells Fargo:
1) 2019 $14.6B
2)
2020 $12.5B ( 14%)
3)
2021 $17.1B (↑ 37%)
4)
2022P $19.3B (↑ 13%)
5)
2023P $20.3B (↑ 5%)
6)
2024P $21.0B (↑ 3%)
7)
2025P $21.3B (↑ 1%)

Why this matters: Netflix grew content spend faster than subscribers during 2021. Increasing revenue could include price increases, sponsorships, and advertising.

YoY increase for Netflix between 2020-21:
1) Subscribers  – ↑ 9%
2) Content spend – ↑ 37%

Mr. Screens’ Crystal Ball: Wall Street will treat Netflix like a technology company as long as it grows like one.  Once the growth story is over, Wall Street will treat Netflix like a media company that needs to maximize future cash flows.

Netflix January 2022 price increase (% change) according to Hollywood Reporter:
1) Basic – $8.99 → $9.99 (↑ 11%)
2) Standard – $13.99 → $15.49 (↑ 11%)
3) Premium – $17.99 → $19.99 (↑ 11%)

Dive deep: What Does Netflix’s Growth Mean For Convergent TV?

 

Video #1: Netflix stock hammered after earnings

Video #2: Business Strategy Sprint Case Study – Netflix


Outstanding questions:
1) If Netflix has growth problems while dominating viewership for streaming content (see above), what does that mean for everyone else?

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.