More NETFLIX layoffs rumored for end of week - report

BEYONCE drops new song / Streaming Service scorecard going into Q2 results / Mirren-Ford YELLOWSTONE prequel moves back 9 years

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Mornin! This is Sean McNulty and here’s the Hollywood + Media news to know on TUESDAY June 21, 2022.

Where it’s now Summer! So guess I’ll head out on vacation - no one bother me from… 415p to 445p. The newsletter business is merciless.

what’s that thing she was holding? ahhh just kidding magazines. via Giphy

AND: Yeah it was a very quiet day yesterday so - thought I’d take the moment to lay out some streaming service numbers as they stand before Q2 ends in a little over a week and results come in next month, further sketching out things I discussed with The Ankler team on the podcast from the weekend.

That breakout is down in THE MEDIA BIZ section. (also my memory was way too generous in the podcast about the $$ losses at DIS+, PAR+ and PEACOCK in Q1 😲).

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📽 THE SILVER SCREEN

movie biz definitely took the day off. via Giphy

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📺 THE TV SET

definitely has never happened to me. this week. via Giphy

JUST A SMALL LIST

• New round of layoffs could hit NETFLIX by end of week according to VARIETY. Thought to be of similar scope to the May layoffs (150+), but no real specifics offered.

• The PAR+ “Yellowstone” prequel with Harrison Ford & Helen Mirren is rewinding 9 more years, now called “1923” instead of “1932”. /Deadline

• HBO adds Steve Zahn to “The Righteous Gemstones” season 3. /TheWrap

• PAR+ adds Dana Delaney to Stallone’s “Tulsa King” mob series. /Variety

• APPLE TV+ orders 8 episode UK detective series “Criminal Record” about 2 detectives on either side of an old murder case that gets re-opened. With Peter Capaldi (“Doctor Who”) and Cush Jumbo (“The Good Wife”). /Deadline

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💻 THE MEDIA BIZ

via Giphy

STREAMING SERVICES SCORECARD as Q2 Results come closer on the horizon

Here’s my #medianerd snapshot the major streaming services based on Q1 numbers and any updated info since - Not really based on subscribers, but rather on how much money they’re making… or not.

Last I checked - content & marketing aren’t any cheaper for one of these players than others (there’s no talent & crews ‘PAR+ Discount’ as far as I know). So - Revenue and profitability (or lack thereof) are extremely relevant - really more so than the subscriber numbers that everyone continually has focused on.

Especially if a Recession indeed develops on the horizon.

All numbers here are as of the end of March / Q1. When gas was still around $4 a gallon and mortgage rates were (barely) under 5%. #goodtimes

• NOTE: There’s ZERO info avail on APPLE TV+ or AMAZON PRIME VIDEO 🙄 (other than there are over 200 Million global AMAZON PRIME customers, who obviously get APV for free no matter what).

• And given the money these 2 companies make (And the quarterly profit at APPLE specifically), they’re just playing an entirely different financial game.

Q1 (Jan-Mar 2021) REVENUE (Profit / Loss) chart:

• NETFLIX: $7.8 Billion ($1.6 Bil in Profit)

• DISNEY+: $1.8 Billion (Lost $887 Mil)

• HULU: $1.6 Billion (profit / loss NA, but gonna go with profitable)

• HBOMAX US REVENUE only: $1.6 Billion (no P/L info avail - more on this below)

  • This includes HBO’s traditional cable biz revenue

• PAR+: $586 Million (Lost $456 Mil more or less - breakdown below)

• PEACOCK: Revenue N/A (Lost $456 Mil)

ABOUT HBOMAX:

• AT&T didn’t break out specifics on total HBOMAX Q1 global revenue, ARPU or profit / loss

• BUT: WARNER MEDIA (where HBOMAX is housed) had $1.3 Billion in profit in Q1, which was down 32% vs Q1 2021, indicating big HBOMAX investments (and all the CNN+ launch costs #RIP).

• NOTE: The entertainment divisions as a whole at all parent companies above (DIS, PAR, NBCU) each made a profit in the quarter despite the huge streaming losses.

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NETFLIX : 221 Million global subscribers

Q1 REVENUE: $7.8 Billion

Q1 NET INCOME (profit / loss): $1.6 Billion in the black

• #ARPU (avg revenue per user, per month):

  • US: $14.91 (74.6 Mil subs)

  • EUROPE + MIDDLE EAST: $11.56 (73.7 Mil subs)

  • LATAM: $8.37 (39.6 Mil subs)

  • ASIA PACIFIC (incl INDIA): $9.21 (33.7 Mil subs)

THINGS TO NOTE:

• NETFLIX is profitable with very healthy ARPUs, although growth is slowing (both subs & $$).

• Very well diversified subscriber base, with a lot of runway in ASIA PACIFIC region.

  • But given the high ARPUs - not any much room to raise price as a source of increasing revenue in many regions, and hitting the ceiling subscriber growth-wise in the US and EUROPE.

• Hence - Ad-supported version due by end of year in the US is an effort to reach customers not willing to pay $15+ a month, as user growth has reached its limits.

  • Question is how many will shift from paying $15+ a month, to new tbd Ad-supported lower cost tier? (yes Ad revenue here will help the ARPU on this but… it’s complicated. Email me if you want a further breakdown).

• Still mum on any password crackdown measures.

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DISNEY+: 138 Million global subscribers

Q1 REVENUE: Approx $1.8 Billion

Q1 NET INCOME: Lost $887 Million

#ARPU: $4.35 global

• US: $6.32 (44.4 Mil subs)

• INT’L: $6.32 (43.7 Mil subs)

• DIS+HOTSTAR (mostly INDIA): $0.76 (50.1 Mil subs)

HULU: 41.4 Million US subscribers

Q1 REVENUE: $1.6 Billion

Q1 NET INCOME: n/a

#ARPU: $12.77 (again, a US-only business).

• No breakouts for HULU’s international equivalent STAR in countries where it’s avail as a standalone streaming service (I think that’s just in LATAM) as far as I can find.

THINGS TO NOTE:

• Obviously the TBD impact of the impending DIS+HOTSTAR subscriber losses over the next 9 months… #cricket

• Unknown impact of likely having to revise down their 230 Million DIS+ subscribers by Fall 2024 forecast at some point.

• But also HULU’s sub growth in Q1 was one of its lowest #s in recent memory, and it doesn’t have any international levers to pull for growth.

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HBOMAX : 77 Million global subscribers

No Revenue or Profit/Loss specifics on HBOMAX, but HBOMAX is part of WARNER MEDIA, and those #s:

WM Q1 REVENUE: $8.7 Billion

• HBOMAX - US REVENUE only: $1.64 Billion

WM Q1 NET INCOME (profit / loss): $1.3 Billion profit (-32% from Q1 2021)

• HBOMAX #ARPU

  • US: $11.24 (48.6 Million subs)

    • This is all-in: includes HBO cable subs, both ad-free and ad-supported HBOMAX versions

  • GLOBALLY: n/a (HBOMAX not so much on these breakouts)

THINGS TO NOTE:

• Q2 Earnings Call (likely early August-ish) will be Zaslav’s first as head of WBD - In the past, AT&T earnings calls were dominated by a lot of phone biz talk, so HBOMAX will be getting fresh (and closer) scrutiny from Wall Street analysts, who will likely expect a bit more detail (#GlobalARPUs)… and raise more eyebrows if they don’t get it 🤨.

• HBOMAX has a very healthy US ARPU, although its overall profitability / loss was never broken out, so a bit hard to discern the business health.

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PARAMOUNT+ : 40 Million global subscribers

Q1 REVENUE: $585 Million

Q1 NET INCOME: Loss of $456 Million (note this loss is for all PAR streaming… but very likely reflects mostly PAR+ losses, not anything signifcant at SHO or PLUTO, which are likely profitable)

#ARPU: No specifics given… other than US ARPU is “around $9 a month”.

• Global ARPU is around $5 using back of the napkin math.

THINGS TO NOTE:

• SHOWTIME to be offered as an add-on in PAR+ this Summer

• PAR+ will be added to the INDIA streaming service VIACOM18 “next year”… probably around the time the IPL starts in April #justguessing

• For fellow #medianerds - THR has a good overview of the VIACOM18 business today… of which PARAMOUNT GLOBAL owns just 9% apparently

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PEACOCK: 13 Million paying (US) subscribers

• No breakdown of how many of the 13 Mil get it free via COMCAST, CHARTER or COX cable TV packages.

15 Million monthly users (MAUs) of Free PEACOCK (thinking they don’t replace the PEA with FREE when referring to it internally).

Q1 REVENUE: N/A

Q1 NET INCOME: Lost $456 Million (yes, exact same amount as PAR)

#ARPU: None shared

Naturally this is all US based - will see if COMCAST releases any info with PEACOCK being added to SKY subscriptions in EUROPE.

THINGS TO NOTE:

• They said at the end of April that Q2 growth will be “soft”, and are not expecting big growth until… Q4.

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END ANALYSIS:

Everyone’s down on NETFLIX… and yes there are legit headwinds - but they’re still head, shoulders, chest and arguably waist over everyone else building a streaming business.

And all of these burgeoning streaming services built by rival media conglomerates have been modeling themselves on the very same path that NETFLIX set:

• Incur great programming & marketing losses… while hoping to build your subscriber base big enough to eventually turn profitable.

• NETFLIX did this in a growing economy with low low interest rates. This approach may get much closer scrutiny at these other companies in whatever economy we have later in 2022.

We’ll get great insight into the next chapter when the Q2 Earnings Calls begin with NETFLIX on July 19 - and yes, as longtime readers of THE WAKEUP know, I break down each one as they happen.

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🏦 STOCK NOTES

Markets closed for JUNETEENTH

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👩‍💻 NEW TO WATCH:

NETFLIX “Psychosexual” - Joel Kim Booster comedy special - STREAM HERE

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🎥 TRAILER HOUSE

HULU “Gamestop” docu trailer - One of the 153 projects that was announced after the #gamestonk madness of early 2021. PREMIERES… sometime or other (if anyone from HULU is reading this… you posted the textless version of the trailer).

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🎧 PLAYING ME OFF

New BEYONCE “Break My Soul”, giving off some dance remix vibes without the remix.

If you need some new tunes:

Email me anytime at seanmcnultynyc@gmail.com or connect here on LINKED IN.

-SEAN MCNULTY

@theseanmac on TWITTER

@TheWakeupNews on INSTAGRAM

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