![]() ![]() But in the long term, we've got to be able to monetize it. Now, it will take a couple of decades to get there, it's not overnight. Even ex-China, if we're able to pull that off, to be the place where the whole world goes to for most of their entertainment, then you're definitely thinking too small. For context, consider what Reed Hastings said on the Q3 FY21 call (when he was asked if Netflix could increase its content budget another 2x – 3x): “We're really entertaining the world. That said, Netflix’s own ability / willingness to keep investing aggressively is also worth looking into. ) The fact that Netflix achieved that result while driving consolidated ARM growth makes that outcome even more noteworthy. ![]() (That said, this reflects a major slowdown from the growth rates achieved in pre-pandemic years. Given the competitive dynamics at play during the intervening years, which included aggressive pricing by legacy media companies looking to establish a DTC subscriber base (the precursor to building a DTC business ), I think double-digit annualized subscriber growth for the incumbent after 10+ years in the business is an impressive outcome. As you can see in the below chart, this total is ~40% larger than it was in Q4 FY19 (pre-pandemic). All-in, Netflix’s ship is moving in the right direction with effective execution, I think they will further distance themselves from competitors in the years ahead.Īt the end of Q1 FY23, Netflix had ~233 million global paid subscribers. Finally, after 15 years of focusing on growth above all else, the company is starting to optimize its business further down the income statement. In addition, while it remains early days, management is figuring out the path forward on notable initiatives like the password sharing crackdown and the ad-supported tier. In a relatively quiet quarter (particularly compared to what we’ve seen over the past ~18 months), Netflix continued to make progress on its primary revenue drivers: subscriber growth and FX-adjusted average revenue per membership, or ARM. On Tuesday, Netflix reported its Q1 FY23 results. Further bumps along the road are inevitable – but the long-term destination should prove well worth the ride.” As others in the industry are forced to address the realities that have surfaced over the past year, Netflix stands alone in its ability to remain 100% committed to the long-term opportunity in streaming… I continue to believe that opportunity will be substantially larger than it appears today (in terms of revenues and profitability / FCF). In the midst of the most competitive environment that they’ve ever faced, Netflix maintained a substantial lead over their streaming peers on key metrics like revenues and engagement. ![]() “I think Netflix’s 2022 performance was revealing. ![]()
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