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WHAT’S AHEAD FOR NETFLIX
Well first - the latest price increases certainly now make more sense… a 40% chop in NET INCOME in Q4 indicates they clearly need more $$ to:
Support the bigger Marketing & Shoot budgets for the blockbuster-style movies they’re now doing #2RedNoticeSequels.
Subsidize the huge INDIA price cuts they just made in December. Clearly INDIA is being seen as a go-to source to start tapping for subscriber growth in 2022+.
NETFLIX is estimated to only have about 5 Million subscribers there. DISNEY+HOTSTAR has well over 40 Million. Granted they have Cricket rights… and HOTSTAR was a legacy business that DISNEY+ added itself onto, but still. There is plenty of market share for the taking with a now competitively priced product.
While there is little profit to be had in INDIA at the new prices (a year costs as little as $25, similar to DISNEY+HOTSTAR) - as DISNEY has shown, Wall Street DGAF how much new subscribers are paying for your product… their ARPU fell consistently in 2021. The only thing that matters is that the overall global subscriber number keeps going up.
And NETFLIX is starting to lean into that vs. keeping ARPU going up in all regions (ARPU has decreased slightly the past 2 quarters in the ASIA PACIFIC/APAC region, where INDIA is housed so expect this to continue to drop).
NETFLIX’s recent new investments in Sub-Saharan AFRICA production indicate that region will be another lever to try & pull to keep subscribers going up in the 2020s. Only 1% of the population there has NETFLIX. Granted broadband there is an issue, but still.
THOUGHTS LOOKING AHEAD: NETFLIX is going low with the 2.5 Million Q1 2022 Subscriber estimate in anticipation of some US churn from the price increase - esp as their biggest titles won’t hit until March (“Bridgerton” and another Ryan Reynolds movie).
But given the INDIA thing will be in full effect for a quarter - 2.5 Million seems low. (Q1 2021 added 4 Million, and cutting NETFLIX in dead of Winter in the US may not be too appealing). And the company certainly has a history of being conservative… or at minimum, they know guidance is really part science and part art at this point.
Plus remember that they have a few promising things in Feb - the KANYE docu, the first new MADEA movie in a long while, and the SHONDALAND limited series “Inventing Anna” which looks solid.
So… #ImWithReed - stay calm. At 75 Million US subscribers, the next streaming service is still 30 Million away (HBOMAX), and globally it’s still essentially 2X any other streaming service (And no I don’t count shipping / streaming service AMAZON PRIME).
2021 was the year every long-promised streaming service was finally launched and came at the king, and the king finished strong.
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