Hastings: Netflix Sub Numbers Not as Important as Time Spent Streaming

It’s no secret Netflix subscriber growth is slowing as the SVOD pioneer reaches market saturation. The service is projected to reach 165 million subs worldwide at the end of the current fiscal quarter, ending Dec. 31.

That reality at a time when high-profile competitors such as Apple, Disney, WarnerMedia and NBC Universal enter the streaming video wars underscores why Netflix co-founder/CEO Reed Hastings is hoping Wall Street and others will shift their focus from sub growth to viewing hours.

Speaking Dec. 6 at The New York Times DealBook confab in New York, Hastings said time spent streaming content should become the new metric underscoring a service’s success.

“You’ll hear some subscriber numbers but you can just bundle things so that’s not going to be that relevant,” Hastings said. “So the real measurement will be time — how do consumers vote with their evenings? What mix of all the services do they end up watching?”

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Earlier this year Streaming Observer concluded Netflix subs worldwide spent 164.8 million combined hours a day watching content — and in the process used nearly 500 million GB of data on a daily basis.

Indeed, Hastings’ comment may ring true as nascent competitors such as Apple TV+, Disney+ and HBO Max offer free service to in-house and third-party platforms such as Verizon and AT&T. Apple is offering its service free for one year with any Apple hardware purchase.

Netflix itself has a promotional free year of service with select T-Mobile service plans.

Hastings contends most consumers will subscribe to multiple services, reiterating that he will personally subscribe to Disney+ (“They have great shows!” he said) upon its Nov. 12 launch.

At the end of the day, Hastings is betting consumers will lean toward established brands with proven track records in the SVOD space.

“When you think, ‘Do I turn on cable, do I turn on YouTube, do I turn on Netflix?’ we want you to choose Netflix,” he said.

Reed Hastings Defends Netflix Censoring Content in Saudi Arabia

Netflix is the biggest subscription streaming video service in the world with more than 158 million subscribers, including about 1 million in Saudi Arabia.

Speaking Nov. 6 at The New York Times DealBook confab in New York, co-founder/CEO Reed Hastings was asked about the streamer’s decision earlier this year to delete an episode of “Patriot Act,” the comedy starring Hasan Minhaj, within Saudi Arabia. In the episode, Minhaj (formerly with “The Daily Show”) criticizes Saudi leader Mohammed Bin Salman, characterizing the crown prince as an impediment toward social progress in the Muslim country.

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“There are people in Saudi Arabia fighting for true reform, but [Bin Salman] is not one of them,” Minhaj says in the episode, which is still available in other countries.

Saudi officials contacted Netflix requesting the episode be cut, which the service agreed to do, citing a “valid legal request” from the government.

“We strongly support artistic freedom worldwide and removed this episode only in Saudi Arabia … to comply with local law,” Netflix said in a media statement earlier this year.

Hastings defended the decision, arguing Netflix remains in the entertainment business.

“Well, we’re not in the news business. We’re not trying to do ‘truth to power,'” Hastings told attendees. “We’re trying to entertain. And we can pick fights with governments about newsy topics, or we can say, because the Saudi government lets us have us shows like ‘Sex Education,’ that show a very liberal lifestyle, and show very provocative and important topics.”

Separately, Hastings, as expected, said Netflix would spend $15 billion on original content in 2019, with plans to significantly increase spending going forward.

“We plan on taking spend up quite a bit,” Hastings said. “We’re growing and investing around the world. We’ve been strong in series. Now we’re getting really strong in movies.”

Netflix plans to increase spending on animation and unscripted content in 2020.

“We’re investing heavily there,” Hastings said. “We’ll continue to push the envelope.”

Netflix Brass Doubles Down on Indifference to Pending SVOD Competition

With Disney and Apple just weeks away from launching branded subscription streaming video services, Netflix remains defiant to the pending competition, which includes service launches from WarnerMedia (HBO Max) and NBCUniversal (Peacock) early next year.

Speaking on the company’s Oct. 16 fiscal earnings webcast, CCO Ted Sarandos walked back any apparent corporate weakness regarding comments CEO Reed Hastings made in the United Kingdom last month about a whole new world in over-the-top video awaiting come November.

“I think I got the subtlety of the brave — the whole new world Aladdin reference,” Sarandos quipped. “Everyone else took it pretty literal.”

Many on Wall Street had taken Hastings’ comment to suggest Netflix was concerned, especially after HBO Max and Peacock took away Netflix streaming rights to popular reruns of “Seinfeld” and “The Office,” respectively.

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“From when we began in [2007] streaming, Hulu and YouTube and Amazon Prime Video were all in the market,” Hastings said. “All four of us have been competing heavily, including with linear TV, for the last 12 years. So fundamentally, there’s not a big change here.”

Hastings said he found it “interesting” to see both Apple and Disney launching services in the same week after 12 years of not showing much interest in SVOD.

“I was being a little playful with a whole new world in the sense of the drama of it coming,” Hastings added. “But fundamentally, it’s more of the same, and Disney is going to be a great competitor. Apple is just beginning, but they’ll probably have some great shows, too.”

Indeed, until just recently, Disney exclusively licensed original movies and rights to create original Marvel TV series to Netflix.

The Netflix co-founder reiterated that the SVOD market remains more in competition with linear TV than within its market. He said OTT video is still a relatively small player compared to broadcast TV.

“So, just like in the [shareholder] letter … [writing about] multiple cable networks over the last 30 years not really competing with each other fundamentally but competing with broadcast TV, I think it’s the same kind of dynamic here [with streaming video],” Hastings said.

 

Grandi Notizie: Netflix Expands Italian Presence

Italy in 2020 will begin imposing a 3% tax on digital services generating at least €5.5 million ($6 million) in annual revenue.

While the political move targets American streaming giants such as Netflix, Amazon Prime Video and the pending Disney+ platform, Netflix is hardly scaling back its Italian operations.

The SVOD pioneer, which reportedly has 1.5 million subscribers in Italy, has inked a deal with Comcast-owned satellite TV operator Sky Italia offering subscribers direct access to the service.

Netflix will be available to Entertainment Plus and Sky Q Platinum subscribers.

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Netflix began its partnership with Sky in 2018 in the United Kingdom, followed by Sky Deutschland.

“We [want to] make it easier for Sky customers and Italian families to access the complete Netflix experience,” Filippo Zuffada, EMEA partner marketing director at Netflix, said in a statement.

Indeed, Netflix CEO Reed Hastings was Italy this week to announce the opening of an office in the country as well as plans to invest €200 million ($220 million) in original Italian content production.

Establishing an office in Italy would also mitigate efforts by lawmakers seeking taxes from foreign online companies (notably Netflix) doing business within the country’s borders without a physical presence.

Netflix’s investment follows a previously-announced pact with Italian broadcaster Mediaset for the co-production of original Italian movies.

 

Netflix Partnering with Italian Broadcaster Mediaset for Movie Productions

Netflix has reportedly signed a co-production movie deal with Italian broadcaster Mediaset for seven titles to be distributed in the country and worldwide.

Mediaset Italia claims to target more than 60 million Italians living around the world. The company’s domestic TV channels include Canale 5, Rete 4 and Italia 1.

Italian daily Il Sole 24 Ore reports Netflix will majority fund the movies in exchange for first-run distribution rights. CEO Reed Hastings is scheduled to appear Oct. 8 for a public presentation of the deal.

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Mediaset CEO Piersilvio Berlusconi earlier this year disclosed the broadcaster was in negotiations with Netflix and Amazon regarding original content production.

The pact with Mediaset comes as Italian prosecutors have reportedly opened an inquiry involving Netflix’s tax status in the country.

Netflix reports third-quarter (ended Sept. 30) results on Oct. 16.

Hastings: Netflix Girding for ‘Whole New World in November’

With a slew of new subscription streaming video services launching soon, including Apple TV+ and Disney+ in November, and NBC Universal’s Peacock and WarnerMedia’s HBO Max early next year, market behemoth Netflix is preparing for battle.

Speaking Sept. 20 at the Royal Television Society confab in Cambridge, in the United Kingdom, Netflix CEO Reed Hastings told attendees the SVOD pioneer has spent $500 million (£400 million) on original content production in the region this year with plans to increase the amount next year.

Over the summer, Netflix leased Pinewood Studios’ Shepperton facility — a move later emulated by Disney for Pinewood’s Buckinghamshire facility near London.

Reed Hastings

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Netflix’s forthcoming comic book-based action movie, The Old Guard, starring Oscar winners Charlize Theron, Chiwetel Ejiofor and KiKi Layne, among others, was filmed at Shepperton.

“While we’ve been competing with many people in the last decade, it’s a whole new world starting in November,” Hastings said, as first reported by Variety. “It’ll be tough competition. Direct-to-consumer will have a lot of choice.”

Hastings said Netflix was not interested in acquiring production facilities globally, preferring to rent as market conditions dictate.

He said the increased SVOD competition worldwide (Disney+, Hulu, Apple TV+ all have global aspirations), including Amazon Prime Video have upped production costs exponentially.

“Someday ‘The Crown’ will look like a [fiscal] bargain,” he said.

Hastings added that as SVOD and ad-supported streaming proliferate worldwide, traditional pay-TV still dominates consumer viewing habits.

“We win only about 5% of television viewing hours, so we’re nowhere near a concentration risk [to pay-TV],” he said.

Netflix Shares Rebound Following $26 Billion Market Valuation Loss

Netflix shares are on the rise again following a seven-day freefall that saw the SVOD pioneer’s stock plummet nearly 20% (or $26 billion) in value after posting disappointing Q2 subscriber growth numbers.

Shares closed July 24 up 3.5% to $317.94 per share — still a ways off the $362.78 valuation on July 17 when Netflix reported fiscal results.

Indeed, the service posted a loss 126,000 domestic subscribers after projecting growth of 300,000 subs. It was Netflix’s first domestic sub loss since 2011 when co-founder/CEO Reed Hastings announced – in an ill-advised tweet from home – the separation of the company’s legacy by-mail DVD rental business from its subscription streaming business.

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Despite quickly cancelling the move following subscriber blowback, Netflix shares nosedived 75% in value.

The latest stock decline reportedly cost co-founder/CEO Reed Hastings, who owns 2.5% of Netflix’s stock, $850 million.

Before the drop, Netflix shares were up 35% year-to-date. The service expects to add 7 million subs in the current third quarter, which ends Sept. 30.

Separately, Netflix launched a mobile-only subscription plan in India for 199 Indian rupees ($2.89) monthly – less than half the service’s basic $7.23 plan. The SVOD service’s standard plan in India costs $9.41 and $11.58 for premium access.

The move comes after Netflix added just 2.7 million subs globally in Q2 – slightly more than half of the 4.8 million subs projected.

 

 

Post Subscriber Hiccup, Netflix Piles Praise … on HBO

After disappointing Q2 subscriber growth numbers, Netflix senior management on the fiscal webcast took the high road deflecting the subscription streaming service’s first domestic quarterly decline (since 2011) while adding only half of projected international subs.

CEO Reed Hastings said it might be easy to “over-interpret” the lack of sub growth but that under similar circumstances three years ago  management also could not be confident of any specific reason for the slowdown.

“Then, we were $2 billion in quarterly revenue,” Hasting said. “Now, we’re $5 billion. We’re just executing forward and trying to do the best forecast we can.”

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When Netflix launched streaming video 12 years ago, there were three competitors (Hulu, Amazon and YouTube). Now, media giants NBC Universal, Disney, Apple and WarnerMedia are launching high-profile competitors – and taking their Netflix-licensed content with them.

Regardless, Hastings said Netflix remains in excellent position as the No.1 SVOD service in the world with more than 151 million subs.

“If investors believe in Internet television … then our position in that market is very strong,” he said.

Chief content officer Ted Sarandos said the service continues to focus on creating original content developed in local markets with global appeal.

He said recent releases “How to Sell Drugs Online” (Germany), “The Rain” season 2 from Denmark and “Quicksand” from Sweden, have generated upwards of 15 million combined viewers globally.

Netflix is expecting a similar reception to the second season of India’s “Sacred Games,” which launches this quarter.

“What’s been amazing is [that the shows have] been deeply relevant in the home country, traveled the region very well and found global audiences,” Sarandos said.

With WarnerMedia set to launch SVOD competitor “HBO Max” in early 2020, it was interesting to hear Netflix brass sing praise for the venerable premium pay-TV channel. Indeed, Hastings said most Netflix employees subscribe to HBO.

“We love the content they do and that spurs us on to want to be even better,” he said. “So, it’s a great competition that helps grow the industry.”

Sarandos congratulated HBO for re-taking the Primetime Emmy Award nominations title, which Netflix claimed from the network for the first time in 2018 after 17 years.

“They continue to be the gold standard that we chase, and we’re really thrilled for them,” Sarandos said.

Netflix Vows to Stay Ad-Free

Netflix July 17 put to rest speculation it plans to incorporate advertising into programming similar to what Hulu does.

With the SVOD pioneer spending billions annually on content, Wall Street analysts have suggested Netflix would roll out an ad-supported viewer option to generate incremental revenue to help pay for it.

CEO Reed Hastings put a halt to the scuttlebutt.

“We, like HBO, are advertising free,” Hastings wrote in the shareholder letter. “That remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false. We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.”

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Netflix Seeks New $2 Billion Bond Debt as Executive Compensation Balloons

With Netflix continuing to exponentially outspend ($12 billion in 2018) its over-the-top video rivals on original content and other corporate needs, the SVOD pioneer April 23 disclosed it is seeking an additional $2 billion in long-term debt financing.

The new bonds — Netflix’s first in six months — would be carried out in a two-part deal with an undisclosed interest rate and maturity date.

Netflix ended first quarter (ended March 31) with more than $10.3 billion in long-term debt – up 58.5% from long-term debt of $6.5 billion in the previous-year period.

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The SVOD behemoth could theoretically ask co-founder and CEO Reed Hastings for the funds. The 58-year-old Hastings ended the fiscal period with more than 10 million outstanding Netflix shares, worth more than $3.7 billion.

Separately, Hastings saw his total 2018 compensation increase 48% to $36.1 million from $24.4 million in 2017, according to a regulatory filing.

Chief content officer Ted Sarandos saw his compensation increase 32% to $29.6 million from $22.4 million in 2017. The executive ended the period with more than 490,000 Netflix shares worth $184.2 million.

Chief product officer Greg Peters received $12.5 million in compensation – up from $8.6 million in 2017; excluding $89 million in stock holdings.

Former CFO David Wells earned $5.4 million from $4.5 million, excluding $73.5 million in stock.

Finally, chief marketing officer Kelly Bennett, who is leaving the company, earned more than $7.3 million in 2018. He will exit the company with nearly $20 million in Netflix stock.