Netflix: Lower Content Spend Strikes Free Cash Flow Boost Swipe Rivals
Netflix has found itself with cash to spend thanks to the writers and actors strike.
The company said that it would spend less on content that it “originally anticipated” this year as a result of the WGA and SAG-AFTRA walkouts as well as “timing of production starts”.
As a result, it anticipates at least $5B in free cash flow for 2023, well up from its previous estimate of $3.5B. This comes after it generated $1.3B in its second quarter, compared with a breakeven a year ago.
While the streamer admitted this may “create some lumpiness” on free cash flow from 2023 to 2024, it added that it plans to “deliver substantial positive” free cash flow in 2024.
This comes as it added 5.9 million global subscribers, reaching 238.3 million, with password sharing pushing subscribers to the months-old $7-a-month plan with advertising.
These numbers will likely not play well on the picket lines, with one of the streamers that has become the central part of the fight against Hollywood having so much cash on tap.
There was little content news in Netflix’s earning statements, but the company did trumpet its revamped viewing figures.
In June, it made some big changes to the way it reports streaming viewership.
The streamer now reports average viewership for its programming as “views,” which is hours viewed divided by total runtime. While hours viewed will still be available, Netflix will now use this new metric for its Top 10 rankings, including the all-time Most Popular lists.
Additionally, Netflix has expanded the measurement window from 28 days to 91 days, in an effort to give films and shows time to grow.
This led to an interesting shakeup in its top titles such as Wednesday taking over Stranger Things 4 as its most popular English-language series of all time.
“We think this new approach is more intuitive and it also adjusts for runtime (i.e. longer films or series don’t get an inherent advantage). We’ve also extended our Most Popular lists of all time from 28 days to 91 days so people can see how great stories grow over time,” it said.
The company also took a swipe at some of its rivals for not offering similar numbers (although the caveat is that we can only see the numbers that Netflix would like us to see).
“We believe sharing this engagement data on a regular basis helps talent and the broader industry understand what success looks like on Netflix—and we hope that other streamers become more transparent about engagement on their services over time,” it noted in its earnings.
Source: Deadline
