THB #188: The Day Before Netflix Q2

I have been reading all the writing I can. Everyone is speculating about this or that. I even heard the crazy talk about Comcast buying everything that might be for sale again. Fantasies that Netflix will suddenly drop another $50 a share. Not happening!

I spent all day thinking about what I wanted to contribute and the answer I kept running into was… nothing.

Any advertising is 2 quarters away and will likely not include America until 2023. The Gray Man will not have hit the service tomorrow. Unlikely that any of the bosses will acknowledge cutbacks, of spending or personnel.

The only likely thing to really happen tomorrow is for the boys to try to reshape the story about Netflix moving forward. They have Microsoft set. So they have a flag stuck in the ad ground. Stranger Things will be mentioned 30 times or more. We will find out what they want us to think. Lose fewer than 2 million… more than 2 million… it’s not really important to the business. It is something for media to talk about. When they lose 5 million U.S. subs, call me. Not happening this week.

Sometimes, it just makes sense to stop and wait for the news to happen.

It will happen.

I expect there will be a lot of dramatic writing coming out of tomorrow… but not a lot of real drama.

I was just going to send this out, but I ran into something I wrote a month or more ago and edited out of a bigger piece because it was just way too much stuff to read.

So… read through it if you feel like it… it’s things I have said repeatedly, a bit of history, laid out a little differently…

Until tomorrow…

This is where the media gets caught up in the micro picture, primarily based around Wall Street. We tend not to look past it, because there is nothing concrete to report.

The ongoing story of streaming is in 3 places:
1. The growth of high-quality home internet, both domestically and worldwide, making it possible/comfortable for cord cutting - a full reliance on streaming and not hard wires or satellite windows - for a majority of households domestically and an expanding range of households internationally.

2. The increased cutting of “cords” domestically, loosening cash in the market for people to pay for more streamers and price increases for the top streamers.

3. Streamers adjusting their offerings internationally to each market as they expand into worldwide content deliverers.

As first mover, Netflix did great work to build internationally as successfully as they have. But they have hit a speedbump internationally while domestically, they have hit a level of saturation that will be hard to overcome (as it will for others as they reach it).

What would be best for business?

The answer from Comcast isn’t going to be the same as it is for Netflix or Amazon or Apple, which are not tethered to the last and still cash-creating era of content delivery. Moreover, the various companies are not allowed to collude in their efforts to find the best solutions for all of them.

When America made the move from broadcast to cable, it wasn’t like this. Why? Because it was a government-driven transition. Governmental agencies had a set of rules, each market added their own rules, and in order to be given the franchise to lay the cords (literally), each of the companies had to comply.

So we went through this massive content transition, multiplying the amount of content available to consumers across America by 30x to 60x, in a very orderly fashion. Once locked down - as the hard wiring allowed - that is when the content battles within the cable business started - leading over decades to tech evolution being paid for by consumers, over and over to the point of disgust.

Even so, it was argued to be progress. And it was. But the less regulated it became, the less progress benefited consumers and the more it benefited getting paid out of the massive pool of money those consumers filled monthly.

You may not remember the days of stealing cable, with clever people channeling one cable to multiple households that were not paying by simply creating a junction. This reminds me of Netflix talking about fighting password sharing. Ha. In Cable World they figured out how to add an extra doorway to the “cable box” to make the stolen signal worthless unless you had the key to unscramble it.