Netflix Continues to Be the "Only Pure-Play Subscription Service Out There": Analyst

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Netflix Continues to Be the "Only Pure-Play Subscription Service Out There": Analyst

Yahoo Finance2023-01-20

Manhattan Venture Partners Head of Research Santosh Rao joins Yahoo Finance Live to discuss Netflix's Q4 earnings results and what the departure of its CEO means for the company.Video TranscriptSEANA ...

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lkb
·2023-01-20
Nice one
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Khoo12
·2023-01-20
Ok
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The company, the subscriber growth number, was a huge story there. Added 7.66 million subscribers in the fourth quarter. But another huge headline co-founder, Reed Hastings, stepping aside as CEO after leading the company for more than two decades.Ted Sarandos, who was already co-CEO, and Greg Peters, who was the chief operating officer, will now be co-CEOs, Hastings writing in a blog post, quote, \"our board has been discussing succession planning for many years. Even founders need to evolve. The board and I believe it's the right time to complete my succession.\"Let's talk about all this with Santosh Rao Manhattan Venture Partners head of research Santosh great to see you here. So starting with Reed Hastings giving up that CEO title. What's your reaction.SANTOSH RAO:I think-- I don't think it'll hurt. I think that's OK. It's a natural progression. I think it's-- Netflix is moving on to the next phase of its evolution, which is really revenue growth, profitability, and all that. It's really managing the costs, managing the operations, doing executing well. So I think he was more a visionary, kind of set the stage, grow the company. I think that phase is still going to be there. Subscriber additions are still important. But I think at this point, they want to focus on revenue and all the other things.So I think it's good. It's a new change. I think he's been doing it for a long time. So and Greg Peters has been around for a long time. He's been a COO and rolled out the advertising platform, advertising tier. So he's well versed in the nitty gritty of the company. So I think it's a great handoff to the next level of management. Next stage of manager.DAVE BRIGGS:And they will no longer give guidance on subscribers concentrating on revenue. But the subs here is a massive win here. 7.66 million added on projections of 4.57 million. How significant is that, Santosh?SANTOSH RAO:It's very significant. It's an amazing number. I'm wondering if it's from the dd tier. We don't know that. We need to see the mix. I know they're not going to disclose that. But we'll have to get some numbers out there. Is it the new people coming in? Which it is? I mean, it's net subscriber adds is seven million. So it's good. It looks like the add tier is working if that's what caused this whole thing.And other than that, I'm telling you, this is the only pure play subscription company out there, subscription service out there. They're doing very well, executing very well. They had a nice slate in the third quarter, and also in the fourth quarter. So I think they're doing well. And maybe they're attracting new people. It's a fragmented market, the streaming landscape. And they are pulling in subscribers. So as long as they continue to execute, I don't see any problem.SEANA SMITH:Santosh, when it comes to the clear path to reaccelerate the revenue growth, I think that's been the big question for the street over the last several quarters, the initiatives that they have taken, is that enough?SANTOSH RAO:Well, that's definitely incremental. I mean, password sharing, which is going to come more and more in 2023, and add tier, which is, of course, like I said, that's their new introduction. That's good. They still need to focus on keeping the base and putting out sticky content, and international growth. That's where the big focus is. That's a long run way ahead. They are in 190 countries. The net revenue from international market is roughly 30 billion. It's a 600 billion market opportunity out there.So I think they have a long runway there. So international is where the growth is going to come from. The developed markets are already saturated. But any incremental at a high cost is going to be net additive to the bottom line. So yes. They will need more, more, and more down the road. But at this point, I think they are in a good position to accelerate their revenues.DAVE BRIGGS:How concerned are you about the big miss on EPS?SANTOSH RAO:Well, I am. I was just reading the release. It looks like a hedge. It's more of-- I think-- I don't know the exact word. But I think it looks like a accounting adjustment there. So I don't think it's really an operational issue. It's more there's something they did with the hedge. So we'll see-- we'll see where that falls when the dust settles. But at this point, it doesn't look like an operational issue. It's more like a hedge that went against them, I guess. So that's what-- I need to read the release more carefully.SEANA SMITH:Santosh, what do you want to hear from the earnings call later tonight?SANTOSH RAO:Definitely. How is the add-tier rollout working out? What are their expectations? What do they expect from the password sharing-- crackdown on password sharing? Those are the two incremental levers that they are pulling. So I definitely need to know that. And if they can give me a number as to how many of the new add-tier subscribers are original higher-level subscribers, or are they new people coming into the ecosystem? So I think I need to see that split.I know they're not going to disclose that. But to the extent they can get more granular in terms of the add tier, I think that'll be a big plus and very good, very additive to the whole story.DAVE BRIGGS:Speaking of additive to the whole story, they were thrown about mentioning potential buyers for the WWE. I was shocked to see them thrown into a handful of names that could potentially look to buy the property. Could you see them making that move? Could they ever make that move into, and I'm going to call this, live sports?SANTOSH RAO:Yeah, I think sporting is a very sticky content. Ultimately, they will get in there in one way or the other. But I wouldn't rule that out. And they are optimizing their whole spend. Right now, they're spending 17 billion on the content. I don't know. This is part of that, or will be part of that, or is it something new besides that. So we'll have to wait and see. But I think they will look at everything. I think that's the name of the game. The competitive landscape is very heated at this point.They need to stay ahead of the game. And they are the incumbent leader. So it's their market share to lose. The others are catching up. They need to consolidate. So a lot of that going on. This is the only profitable streaming company out there. So to maintain that, and to move ahead, I think they need to look at all the opportunities here and there, gaming, and everything else.DAVE BRIGGS:The clear market leader. I just want to be clear, you're not ruling out potentially buying WWE.SANTOSH RAO:Hey, if the price is right and things fall into place, I think they will-- because they're looking at gaming also as one of their-- they already put a foot in that space. But not really totally in terms of live sports and all that. They haven't gone there yet. But this will be something net additive. But we'll see how that plays out. It's very popular. WWE is very popular.So to the extent they can get their content to be more sticky, and keep people into that ecosystem, this will be the right move. But let's see. I mean, it's still early. But I wouldn't be surprised. It's not out of the ballpark.SEANA SMITH:We'll certainly be watching that Netflix shares, up about 4% here after. Our Santosh Rao, thanks so much.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9956746733,"gmtCreate":1674230346023,"gmtModify":1676538932096,"author":{"id":"4125749209074642","authorId":"4125749209074642","name":"lkb","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":1,"idStr":"4125749209074642","authorIdStr":"4125749209074642"},"htmlText":"Nice one&nbsp;","listText":"Nice one&nbsp;","text":"Nice one","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9956746733","repostId":1154643365,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9956724048,"gmtCreate":1674219096685,"gmtModify":1676538931222,"author":{"id":"3564738902623228","authorId":"3564738902623228","name":"Khoo12","avatar":"https://static.tigerbbs.com/a1637796379aeed1538616117eb09330","vip":1,"crmLevel":6,"crmLevelSwitch":0,"idStr":"3564738902623228","authorIdStr":"3564738902623228"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9956724048","repostId":1154643365,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":26,"commentSize":2,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}