THB #521: Netflix Q1 2024
I got nothing.
I mean… decent quarter. The beat expectations in most areas. Clearly, they are still getting some bump from the password sharing crackdown.
Over the last year, US/Canada is up 8.26 million paid subs. Europe and the Middle East is up 14.36 million subs, the largest increase in any region… which suggests they were stealing the most. Latin America is up 6.47 million subs. And Asia Pacific is up 8 million.
That’s really good. But it is the full year of the password crackdown. And that 37.1 million new subs is probably 90% or more of the full squeeze that Netflix is getting from that fruit.
Meanwhile, in the Earnings Interview, which you can bore yourself with if you like…
… there was little sense of the profound changes going on at Netflix as I type.
Even with 4 questions from Always Wrong Rich Greenfield, trying to tee up easy swings for Good Ol’ Ted (taking a pay cut to under a million a week this year… poor guy…), there was as little said in this call as any of the many “smile and tell us you love us as much as we love us” calls we are used to watching.
We shouldn’t expect an intimate journey into the changing culture of Netflix. They don’t have to do it. And really, 95% of people hearing it would not know what to do with the information if they spelled it out with charts and videos. It’s happening. Sands are shifting. It’s going to take a while for it to stabilize. And that’s good. That’s normal… in real life.
But this is Netflix and not real life. As of this writing, the stock is down $29, almost 5%, after hours. This seems to be as irrational as is the stock was up 5% after this quarterly (which has been more the norm).
The story is going to be about Netflix telling the world, in the “printed” report, “ We stopped providing quarterly paid membership guidance in 2023 and, starting next year with our Q1'25 earnings, we will stop reporting quarterly membership numbers and ARM.”
And of course they are lying about why they are making this change. Of course, it is because they don’t expect the quarterly membership numbers and ARPU (I won’t use “ARM”… I’m not a cult member where I refer to a stat by different language for one company) to be to their advantage next year. And it won’t be. And if it is, they will go back to offering the statistic.
But does that really mean you needed to sell your stock this afternoon?
No. Of course not.
Netflix is a mature business. Never forget that in the world of streaming, which is real and forever moving forward, Netflix is at least 5 years ahead of all competition, both in building their audience and the habits that they created. Everyone else is still catching up and, in the smart cases, trying to create their own habits with audiences that want things that Netflix doesn’t offer.
Netflix is doing what mature businesses do. It is looking for new growth opportunities because the old ones are not exciting anymore. Advertising can still be one of those growth opportunities…. so we will see. But gaming? Ha. Could happen. Long odds. Live programming? A step backwards. That is not what they do. They may get good at it by 2030. But it’s uncharted and not the brand.
When the thing you are most excited about on your quarterly call is Tyson vs Jake Paul… a stunt 2 steps from BumFightsLive!!!… well… what can I say?
Not much.
Until tomorrow…