Wall Street Isn't Buying Netflix's Q2 Numbers
Netflix’s Murky Q2 Numbers
Netflix posted a whopping 5.9 million new subscribers in Q2 2023, beating expectations. They attributed much of that growth to their ballyhooed (I love that word) password crackdown, though did not provide any, you know, numbers to support it. More of a “take it on faith” kind of thing.
While the source may seem somewhat obvious, given that they did not really have any major hit series of the sort that traditionally drive new subscriptions during that period, Wall Street likes to see actual numbers.
And Netflix did not give them many.
No word on what percentage of password-sharing households were targeted in the recent crackdown. (Not even a vague stat like “most” or “some”) No word on which plan those reformed password sharers gravitated to. No insights into the number of users on the ad-supported tier either, though the rumor mill has that number at just 1.5 million in the US.
And while revenue did actually grow 2.7% that quarter, that number is a bit below Wall Street’s consensus number, and the gap for their projected Q3 revenue was a bit wider still.
Worse still, as Evan Shapiro points out, while the gap between their projected revenue growth of 3.4% and their actual revenue growth of 2.7% may seem like a rounding error, it’s actually a miss of around 21%.
That’s not nothing, and that, along with all of the above, worked to drive their stock price down 8.5% as of Thursday morning.
The question is, was it justified? [READ MORE]
Local Broadcasters Push Back On vMVPDS
Retransmission rules in the US are tricky. Thanks to the Cable Act of 1992, MVPDs have to carry every local broadcast station and those local broadcast stations can (and almost always do) charge the MVPDs what are known as retransmission fees for the privilege.
Retrans fees, along with their companion carriage fees for cable networks, are worth billions and are why the streaming business, which has no way to collect them, will never be as profitable as old school linear.
You can read our take on all that here, but for today, we’re going to focus in on how a coalition of local broadcast stations are looking to regain their ability to collect those fees from vMVPDs, who, at present, pay those fees directly to the networks with whom the local broadcasters are affiliated.
While it may seem petty, there are tens, if not hundreds of millions of dollars at stake here, along with the growing realization that vMVPDs are, in fact, just MVPDs with a different delivery mechanism and not “OTT apps” with a lot of cable channels. [READ MORE]
Recommended by LinkedIn
Be on the lookout for TVREV’s new Saturday morning Hot List newsletter, where we feature everything you missed on TVREV this week plus top stories from across the industry.
A long awaited follow up to our primer on free ad-supported streaming TV services (FASTs).
Part 2: Advertising goes deep into the ins and outs of advertising on the FASTs. In this report you will learn:
More From TVREV.com
Subscribe to get all 4 TVREV newsletters in your inbox each week