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Friday Mailing: Is That Your Final Answer, Ted Sarandos?
PARQOR is the handbook every media and technology executive needs to navigate the seismic shifts underway in the media business. Through in-depth analysis from a network of senior media and tech leaders, Andrew Rosen cuts through what's happening, highlights what it means and suggests where you should go next.
In Q4 2022, PARQOR will be focusing on four trends: this essay is on the theme, "Hollywood’s future lies in the creator economy, what happens next?"
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My general take on Netflix’s Q3 2022 earnings is that, for all their challenges, they still have over 223MM subscribers and are growing. The statement in the letter to shareholders that management is seeing “some encouraging signs of gameplay leading to higher retention” is interesting. The implication is that gaming has yet to drive growth, but is important to the Net Subscribers number because it reduces churn.
I’m fascinated by something Netflix Co-CEO Ted Sarandos said to close out this week’s earnings call:
“we have to continue to deliver enormous quality and scale. The volume of releasing that we're doing, it's not that we're putting out so much content, just dumping the content into the world. Actually, we're trying to super serve hundreds of millions of people with individual tastes and individual relationships with content and to do that at scale, something that's never been done before.”
It was his answer to a question asked to the entire Netflix team: ‘[what is the single most important thing for you and your teams to accomplish in your respective roles over the next 12 to 24 months”?
It’s one version of an answer to a question I asked on Wednesday: “As cord-cutting accelerates, what is the business of media if an app’s home page is more valuable than the content itself? Why have expensive production budgets for TV shows or movies when ultimately production value matters less than what is being presented when the user logs in?”
Key Takeaway
Netflix Co-CEO Ted Sarandos made a slid sales pitch to investors about why $17B is necessary in the age of the algorithm. But YouTube's growth makes the price tag increasingly seem steep.
Total words: 800
Total time reading: 3 minutes
Why the answer works
It seems unusual for Sarandos to be defending the rationale for Netflix’s content spend 15 years after the launch of its streaming service. Then again, they have had a rough year, shareholders are focused on profits, and therefore if content spend is not generating ROI ...