More bad headlines, and another record, for Netflix

Netflix chief executive Reed Hastings

Netflix has had a bad year for press.

On a January conference call, chief financial officer David Wells offered the extra detail that the $39 million write-off was “related to the societal reset around sexual harassment.”

Kevin Spacey’s name was never mentioned but it was widely assumed the charge related to Netflix decision not to screen – or, at least, stream – remaining episodes of House of Cards, and its decision to shelve a Gore Vidal biopic starring the actor, who had joined the ranks of #metoo disgrace.

And this week, the company said it had fired its top communications executive, Jonathan Friedland, after he used the n-word twice in a meeting, in an apparent attempt at comedy.

At the same time, old-media seemed fired up as Disney and Comcast got into a bidding war for Fox.

But while Spacey's behaviour was abhorrent, and Mr Friedland's behaviours just out-and-out stupid, the bigger picture is that Netflix continues to steamroll ahead.

At the time of the January scandal, its shares were at $US227. This week, they hit a fresh all-time closing high of $US421, before easing back slightly.

Investors are piling on because Netflix continues to add customers at pace.

Some stats from the streaming giant's first quarter (the three months to March 31, 2018; numerical gains are vs the prior quarter; percentage gains vs the year-ago quarter):

  • Global net subscriber gain: 7.41m (+50%) 
  • Net subscriber gain in US: 1.96m (+11.56%) 
  • Net subscriber gain outside US: 5.46m (+42%) 
  • Total paid subscribers: 118.9m (+26%); US: 55.09m; outside US: 63.82m
  • Revenue: $US3.7b (+43%)
  • Net profit: $US290m (+66%)

Growth is accelerating. Subscribers were gained at a record pace (bettering the 25% jump clocked in the fourth quarter of last year). And all of the numbers were ahead of forecast (on a sidenote, of focussed on paid subs only. A number of articles focus on Netflix' total subscriber number, which is 125m including triallists).

Netflix, again, did not break out any figures for NZ. The only streaming contender to offer a figure is Spark, which says "more than 300,000" use Lightbox — but it won't say how many pay (the service is free if you're one of Spark's 694,000 broadband customers).

Netflix' stockmarket runup over the past 12 months has seen its market cap jump to $US179b, passing Disney ($US158.5b) as the world's most valuable media company. Its shares [NAS:NFLX]  hit a fresh record high this week.

But, broadly, there seems to be growth in streaming across the board.

The privately-held Hulu, a joint venture between various US free-to-air networks and movie studios, recently said it had 20 million paying subscribers in the US, vs 17 million in January.

And in an April letter to shareholders, Amazon CEO Jeff Bezos revealed for the first time how many have a subscription to his company's Prime service: "more than 100 million." Analysts estimated Prime membership at around 80 million this time last year.

It's not clear how many take advantage of Prime's video streaming (the omnibus service includes everything from physical good deliveries to e-books, music, TV shows and movies), but we do know that, like Netflix, Amazon is pouring billions into original programming.

The promise and the peril
Like Facebook, Google, Apple and other new media contenders, Netflix and Amazon show limited ambitions in sport, including rights actions for A-list codes over the past few months (Amazon's largest play was to win a slice of English Premier League action in the UK, but despite shock-horror headlines it was a tiny slice).

That's good news for Sky TV here — though mitigated by Spark's sudden interest in rugby.

Speaking of which, part of the reason that Netflix et al have avoided sport is perhaps that it's super-expensive to acquire rights (ESPN is the only network that out-spends Netflix on content) and a logistical hassle to stream live. 

Spark will have become more keenly aware of both factors as Aussie telco Optus had a complete FIFA World Cup streaming meltdown this week, leading to full refunds and the handing over of all games to free-to-air broadcaster SBS.