Katsjing! Netflix adds 29m subs in 2018

In reporting its Q4 results, Netflix has revealed it finished 2018 with 139 million paying memberships, up 9 million from quarter start and up 29 million from the beginning of the year.

The SVoD service grew annual revenue 35 per cent to $16 billion in 2018, and nearly doubled operating profits to $1.6 billion, though this was short of Wall St expectations. Netflix said that as expected, Q4 operating margin dipped to 5.2 per cent vs. 7.5 per cent prior year as a result of so many titles launching in the quarter.

Netflix added a record 8.8 million paid memberships (1.5m in the US and 7.3m internationally), higher than its beginning-of-quarter expectation for 7.6 million paid net adds and up 33 per cent year over year. For the full year, paid net adds grew 33 per cent to 29 million vs. the 22 million it added in 2017.

In a Letter to Shareholders, Netflix advises that it changes pricing from time to time as it continues investing in “great” entertainment and improving the overall Netflix experience. “We want to ensure that Netflix is a good value for the money and that our entry price is affordable. We just increased our US prices for new members, as we did in Q4 in Canada and Argentina, and in Japan in Q3. The new pricing in the US will be phased in for existing members over Q1 and Q2, which we anticipate will lift ASP,” it advises, adding that its multi-year plan is to keep significantly growing its content while increasing its revenue faster to expand its operating margins.

In terms of content, Netflix says it is making significant investments in productions all over the world “because we have seen that great stories transcend borders”. For example, Bodyguard (co-produced with BBC One, from ITV Studios) ranks as one of its most enjoyed co-productions. Baby, its second original series from Italy, and The Protector, its first Turkish original series, both saw strong viewing both inside and outside their home countries. All three of these debut seasons from around the world were each enjoyed by over 10 million member households in their first four weeks. Netflix says that a result of its success with original content, it is becoming less focused on second-run programming.

In terms of competition, Netflix notes that in the US, it earns around 10 per cent of television screen time and less than that of mobile screen time. In other countries, it earns a lower percentage of screen time as a result of lower penetration of its service. “We earn consumer screen time, both mobile and television, away from a very broad set of competitors. We compete with (and lose to) Fortnite more than HBO. When YouTube went down globally for a few minutes in October, our viewing and signups spiked for that time. Hulu is small compared to YouTube for viewing time, and they are successful in the US, but non-existent in Canada, which creates a comparison point: our penetration in the two countries is pretty similar. There are thousands of competitors in this highly-fragmented market vying to entertain consumers and low barriers to entry for those with great experiences. Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers choose. Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for our members.”

TMT analyst Paolo Pescatore described the results as  “a modest quarter to end a mixed year for Netflix,” suggesting that the year ahead will be pivotal. “More providers will be launching SVoD services and they will want to pull their programming off Netflix. Also, expect the likes of Apple to make significant moves in video/TV, leaving the market awash with video services. “Users will be spoilt for choice, maybe a bit too much,” he says.

“Worryingly, the company is burning through a lot of cash. It needs to recoup this by adding customers more quickly, increasing prices or taking on more debt. Therefore, expect price rises in all key markets,” he advises

“Cable and telco partnerships will remain important for further subscriber and revenue growth over the next twelve months,” he says, reflecting Netflix’s comments in its Letter to Shareholders that it is also expanding its bundled offerings which now include: Telefónica in Spain, Comcast and T-Mobile in the US, Sky in the UK and Germany, Free in France, and KDDI in Japan.

According to Josh Krichefski, CEO at MediaCom, Netflix’s growing catalogue of exclusive shows and ongoing push to create original content is clearly reaping rewards, noting that recent hits such as Bird Box and Haunting of Hill House are generating the same buzz as Oscar-winning films. “This is all well and good but it does beg the question of how much longer Netflix can sustain itself without an advertising model, with the likes of Prime Video and NOW TV making up ground quickly. While Netflix currently leads the way in streaming platforms, investing millions and millions into its own content may not be enough to enjoy unbridled success in the future.”

read more here: advanced-television.com

Report: Netflix ramps up local content production

Netflix is aggressively ramping up global productions, particularly in Europe and Asia according to a report from Ampere Analysis. Netflix has seen impressive growth in these markets, adding eight and nine million subscribers respectively between 2017 and 2018. Hoping to replicate the success of hits such as Dark from Germany and Sacred Games(pictured) from India, Netflix announced 24 new titles for Europe in Q4 2018 – that’s equivalent to the total for the region in 2017 and represents 22 per cent of the upcoming catalogue.

Netflix and the giant Dahl catalogue

Netflix has said it will increase the number of European titles it produces by another third during 2019, having delivered 141 projects including recommissions in 2018. The streaming service also announced a major rights deal with the Roald Dahl Company, with ambitions to produce a vast ‘Dahl Universe’ of children’s titles.

International productions are a double whammy for Netflix

Netflix’s investment in localised foreign language content not only maintains subscriber growth, it helps fight domestic competition by captivating users with high-quality international productions. The success of series such as Elite,Narcos and Sacred Games with both native and English language audiences illustrate how international productions can deliver a double whammy for the service. Thirty-six per cent of Netflix’s upcoming originals will be non-English, and 46 per cent will originate from outside the US and Canada.

Netflix is currently producing new content in 25 countries, with 133 titles originating outside of North America, including its first African title. It is heavily focused on specific markets, with the top two international producers of the UK and India accounting for 32 per cent of international productions, and the top five accounting for 56 per cent. Additionally, it is rapidly increasing production in key markets across Asia and Europe, particularly those that have created hit shows for the streaming service in the past. The UK has added 10 titles so far in Q4 2018, India eight, Germany six, and five each in Japan and Spain.

Central and South America misses out in Q4

  • Central and South American productions represent 9 per cent of the entire upcoming Netflix slate, but have only accounted for 5 per cent of the slate in the fourth quarter of 2018
  • So, although the region is home to hits Narcos and 3 per cent, only five titles from South America have been announced for the last quarter of 2018
  • With Mexico currently considering a similar quota policy to that of the EU, Netflix may need to review its strategy in Latin America in the future

read more here: advanced-television.com

Black Mirror: Bandersnatch: what to know about Netflix’s interactive film

Black Mirror: Bandersnatch is Netflix’s latest entry in the popular series and the company’s first real foray into the world of what it’s calling “Interactive Films.” In other words, Bandersnatch is basically a Choose Your Own Adventure movie, complete with branching paths and a variety of different endings. Thankfully, rather than making you play through — or watch — Bandersnatch multiple times, Netflix allows you to watch most of these endings simply by finishing the movie once.

Bandersnatch clocks in at around 90 minutes, making it a little longer than most traditional Black Mirror episodes. The catch, however, is that Bandersnatch can last a whole lot longer if you go back through to see just how differently things can go in the story. If you don’t have time for multiple viewings, however, you do have the option of quickly watching most of the other endings. As soon as the credits roll on whatever ending you first received, you’ll be prompted with new options.

Depending on which choices you made to get there, at the end of the movie you’ll be greeted with either the option to see the credits, or to go back to one of the story’s crucial moments so that you can change up your choices a little and see what things might have been like. This means that you’ll be able to see all, or at least most, of the possible variants without having to start things over from the beginning.

It’s not clear if there’s a limit to this or not. In our testing, we used it to see every ending that’s been found so far, and after repeating a few of them several times, the movie eventually took us all the way back to the Netflix homepage, though it isn’t quite clear why that happened. While it seems that most of the endings for Bandersnatch have been discovered for now, it’s also possible that some more complicated ending, requiring all the right choices, could exist. For now though, we’ll just have to wait and see what other Easter eggs Black Mirror: Bandersnatch might hold.

read more here: www.polygon.com

The disappointment of ‘House of Cards’ and its final season

It seems like Netflix’s “House of Cards” had a real opportunity for a fresh start with season six.

Granted, the behind-the-scenes turmoil probably made this season particularly challenging: Production was already underway when “Star Trek: Discovery” actor Anthony Rapp came forward with allegations that Kevin Spacey made a sexual advance towards him when Rapp was only 14. In response, Netflix and production company Media Rights Capital halted production and ultimately decided to rewrite the season without Spacey’s character Frank Underwood.

If you’ve watched “House of Cards,” you know that this must have been a big change, since Underwood and his political schemes have been at the center of the show for five years. Still, the previous season ended with Robin Wright’s Claire Underwood taking over the presidency, so it seemed like the right time to rethink this as a show that’s centered on Claire.

What we got, however, was a season that’s still very much about Frank Underwood. Sure, he’s died offscreen before the season starts, and Spacey never appears in these new episodes. But he still casts a long shadow over the show, with all of the characters focused on the mystery of his death and the power vacuum he left behind. On the latest episode of the Original Content podcast, we try to explain why we found this approach so unsatisfying.

In addition, we talk about the death of comics legend Stan Lee and Hulu’s plans to create multiple series based on “Wild Cards,” a set of superhero stories edited by George R.R. Martin. This, in turn, leads us to the question on every “Song of Ice and Fire” fan’s mind: When is he going to finish the next book?

listen here to the poadcast:

Netflix ‘on course’ to pass 10 million subscribers in UK

Netflix is on course to pass the 10 million-subscriber mark in the UK by the end of this year, according to research by MTM.

According to MTM, some 1.1 million consumers intend to subscribe to the service by the end of this year, taking the service’s total past the 10 million subscriber mark.

MTM says that Netflix subscribers are among the most satisfied users of SVOD services in the UK with 88% claiming to be satisfied, the highest rating for any subscription TV or video service. This means that churn levels for the service are a less significant challenge than for other SVOD offerings.

According to MTM, Netflix’s integration as part of the Sky Q offering could support further growth for the SVOD service, with 200,000 current Sky Q users looking to subscribe to Netflix by the end of 2018.

MTN says that the ability to easily access Netflix’s service on the primary TV screen will likely increase Netflix’s share of overall viewing within Sky Q homes, pointing out that 31% of all cable operator Virgin Media’s homes with Tivo advanced TV set-tops currently access Netflix via their set-top box.

According to MTM’s ScreenThink market research tracker, based on a survey of over 3,000 UK online users, almost 25% of internet users say that services such as Netflix and YouTube are the first services they turn to when looking for TV or video content, rising to 39% of 16-24 year-olds.

Conversely, 54% of UK pay TV subscribers now believe that their TV service is overpriced, and 1 in 4 are thinking about cancelling their subscription.

“The most recent ScreenThink study provides a fascinating snapshot of a market in transition, demonstrating the significant impact of Netflix and other OTT video services in the UK market,” said Jon Watts, managing partner at MTM.

read more here: digitaltveurope.com

Netflix plans $2bn debt raise to fund further content growth

Netflix, which last week beat Wall Street expectations to post a strong third quarter rise in subscribers, is planning to raise $2bn through a bond offering to fund further content growth.

The funds will be used to acquire content, as well as develop and produce, the area Netflix is most interested in as it continues to build a war chest of original material.

Netflix expects to spend $8bn on content in 2018, and previously announced plans to increase the number of original titles by 700 this year. Stranger Things and The Crown are among its most popular original titles as the company races to build a stable that will overshadow the content creation ambitions of the likes of Amazon Studios and Apple.

Monday’s move follows recently announced fundraising plans by Netflix to the tune of $1.9bn last April, and $1.6bn back in in October 2017.

The announcement had little bearing on share price, which dropped to approximately $330 by mid-day on Monday. Moodys Investor Service gave the streaming giant a Ba3 junk bond rating. The service qualified that by attributing a “stable” outlook to Netflix, based on the latter’s strategy of greater original content delivered directly to customers across a global network.

Netflix has a famously heavy debt load – last month it reported $8.3bn in long-term debt, and total liabilities are understood to exceed $30bn – and acknowledged the scale of its content investment to shareholders last week, adding that they would drive growth in revenue and operating profits for a long time.

read more here: www.screendaily.com

Netflix faces subs losses if it includes ads between shows

Just as the SVOD leader confirmed that it has begun testing the idea of inserting promos for its shows and movies between episodes of current programme, Hub Entertainment Research warns that Netflix could face steep subscriber losses for such actions.

In its study, The Future of Monetisation, the analyst gauged consumer reaction to alternatives to the Netflix pay model status quo, including possible price increases and an ad-supported plan. It conducted its survey among 1,612 US consumers with broadband, who watch at least an hour of TV per week.

The overwhelming conclusion was that the subscription video-on-demand faced alienating its customers substantially, especially if ads were included without a reduction in monthly fees.

Hub found that if Netflix raised the fee for its current, ad-free service by $5 or more per month, about a quarter would consider dropping their subscription. A $2 increase would have just a marginal impact with only 8% saying they’d cancel, while at a $5 boost, 23% say they’d drop their subscription and this figure would rise to 28% at a increase of $10 or more.

Looking at scenarios of what would happened if Netflix began including ads during shows, about a quarter of current subscribers said they’d definitely or probably drop the service. Just 41% said they’d definitely or probably keep their subscription, with 37% undecided.

Hub also investigated what would happen if Netflix content included ads, but the subscription fee were $3 less per month. It found that subscribers would be more likely to keep the service, but that losses could still be significant. In this scenario, 16% said they’d cancel their Netflix subscription if ads were included while half of the sample said they’d keep their service under this scenario, but just 25% say they’d definitely keep it.

read more here: rapidtvnews.com

Disney Reveals Fresh Details of Netflix Killer

Disney’s chairman and CEO Bob Iger has revealed fresh details around the media giant’s upcoming streaming service, touted to be a competitor to the likes of Netflix and Amazon Prime. Iger, speaking on a conference call after Disney’s Q3 financial results, spoke of the “tremendous potential” he sees in Disney’s direct-to-consumer services, particularly following the company’s acquisition of 21st Century Fox.

Disney’s earnings themselves were slightly disappointing, with quarterly revenue of $15.2 billion falling short of analysts’ $15.4 billion expectations. Investors on the subsequent earnings call however were much more interested to hear further information about the company’s in-development streaming service, which Iger said is “on track for a late 2019 launch”, and described as the company’s “biggest priority of the 2019 calendar year”.

Iger said he believes the addition of Fox’s portfolio of content will help make Disney’s streaming service “even more compelling for consumers”. The company already had quite a formidable content catalogue before the acquisition, bolstered by the takeover of studios including Pixar, Marvel and Lucasfilm. The Fox purchase will bring brands such as Searchlight, FX, National Geographic and 20th Century Fox Film under Disney’s roof, adding more variety to content that could be available in Disney’s streaming service.

Iger emphasised that integration of Fox properties into Disney’s direct-to-consumer strategy won’t come at the expense of the movie theatre experience. “We’re obviously very excited to leverage the Fox assets to enhance and accelerate our DTC strategy, but I want to be clear that we remain incredibly supportive and enthusiastic about the movie theatre experience,” he said.

In the Q&A section of the call, investors and analysts were hungry for more specific detail about what Disney’s strategy for its streaming service will be, with Iger giving fresh insight into the company’s plans for the service..

When asked about Disney’s decision to split content over multiple streaming platforms, Iger said the company prefers to offer narrower packages of content at a cheaper price, as opposed to a more Netflix-like model which offers a very wide library of films and TV shows. Disney’s acquisition of Fox will grant it a 60 percent stake in Hulu, and the launch of ‘Disneyflix’ alongside the existing ESPN app will mean content is spread across three different services, but Iger believes this reflects consumers’ desire to pick and choose which content they have access to.

“Rather than one, let’s call it, gigantic aggregated play, we’re going to bring to the market what we’ve already brought to market, sports play,” said Iger. “I’ll call it Disney Play, which is more family-oriented. And then, of course, there’s Hulu. And they will basically be designed to attract different tastes and different segment or audience demographics.”

Iger also shed light on how the company plans to handle issues around existing licensing deals for some of its content. As Sanford Bernstein analyst Todd Juenger pointed out, popular film franchises like Star Wars and the Marvel Cinematic Universe are already tied into distribution deals with other streaming services.

Iger confirmed that some content produced by Disney-owned studios won’t be available on Disney’s streaming service, at least initially, with Star Wars: The Force Awakens for example being unavailable due to an existing distribution deal. He said however that in some of these deals, there will be opportunities down the road to put those films on Disney’s service, and that any content produced from 2019 and beyond will be unencumbered by any such deals. “What we have been doing is making sure that since the time that we made the decision to bring the service out, we’ve not done anything that further encumbers any of our product,” he said.

read more here: videoadnews.com

‘Netflix has killed Canalplay’

Appearing before the French Senate’s commission of Culture and Communication, Maxime Saada, chair of the Canal+ board, has announced that SVoD service Canalplay will cease operating in the coming weeks.

“It’s over for Canalplay. In the last two years, we have been taken off the map in this market which is surplanting television. We had a French Netflix, it was killed,” said Saada.

The platform has seen subscriber numbers plummet from 800,000 to just 200,000 today.

“We were deprived the possibility of exclusives for Canalplay when Netflix stepped into the market,” Saada added.

Giving the example of the upcoming launch of a Studiocanal channel in the US without local hits Versailles or The Bureau, Saada urged the French State to re-examine the production decrees in order to allow French TV groups to own the rights to the drama series they’re investing in.

“We [are bound by] a ball and chain when competing with hegemonic US players such as Netflix, which is recruiting 100,000 subscribers each month in France, and investing billion of dollars into content.”

Saada pleaded for French production players to be helped and protected by new, fairer rules. He suggested that tackling piracy could represent 500,000 new subscribers and an additional €40 million to invest into the country’s movie industry and sports rights.

On the fact that Canal+ lost the rights to the French Football Ligue 1 (to Spanish group Mediapro), Saada also put forward the question of rights sovereignty.

Cordless TV streamers prefer Amazon Prime Video to Netflix

New comScore data shows one-third of TV streamers are cordless. It also shows that cordless Amazon Video users watch 13% more than Netflix users. The difference is all in their content strategies.

Cord-cutter and cord-never differences

According to comScore, one-third of households streaming to the television are cordless. The other two-thirds have either cable, satellite, or telco pay TV services. The cordless group is broken into two broad categories: those that had pay TV and got rid of it (18%) and those that have never had pay TV (14%.)

The cord-cutter group primarily skews older than the cord-never group. The largest group of cord-cutters comes from the 35-44-year-olds, with 23%. 21% of cord-cutters are millennials (18-34-year-olds). Millennials dominate the cord-nevers. 24% of 18-34-year-old TV streamers have never had pay TV, versus 15% of 35-44-year-olds.

Cordless favor Hulu, YouTube

Hulu has the highest percentage of cordless subscribers of the top four online video services. Hulu subscribers make up almost half of those without pay TV. 41% of YouTube users are cordless, and 37% of Netflix and Amazon Prime Video are cordless.

Cordless Hulu users also watch a lot more online video on their televisions. They watch, on average, 86 hours per month and stream to the TV 21.6 days per month. Cordless YouTube users watch 78 hours per month and stream to the TV 19.8 days a month. Surprisingly, Amazon Prime Video users best Netflix in engagement among the cordless users. Amazon users watch 70 hours and 19.8 days per month, Netflix users watch 62 hours and 18.6 days per month.

The comScore data could suggest that, though the cordless group rejects pay TV, they are not rejecting traditional television. They will continue to hear about great TV shows through the social and traditional media and around the water cooler. Moreover, when they hear about a great show, the place they are most likely to find it online is Hulu.

Why cordless Amazon users watch more than Netflix
Another interesting question is why those cordless TV streamers using Amazon watch significantly more (12%) than those using Netflix. This fact is particularly interesting given there is a large overlap between the two groups.

The viewing difference stems from the different content business models used by both companies. Amazon provides a far greater variety of content than Netflix because it resells other SVOD services through its Channels program. It also rents and sells movies through the Prime Video app. According to Ampere Analysis, consumers could access 26,000 distinct movie and TV show titles through Amazon Prime Video as of February 2017.*

read more here: nscreenmedia.com