Two multinational streamers reported their half-year results yesterday with diverging fortunes.
๐ก๐ฒ๐๐ณ๐น๐ถ๐
: ๐๐น๐ผ๐ฏ๐ฎ๐น ๐ฃ๐ผ๐๐ฒ๐ฟ๐ต๐ผ๐๐๐ฒ
Netflix continues to demonstrate remarkable profitability and a massive subscriber base, now 278m. Growth is slowing, and ARPU falling (possibly due to the impact of the ad tier, which is growing but slowly), but with $7Bn cash in the bank, I’m thinking they’re going to be fine. Ted Sarandos spoke about the significant amount of quality local content Netflix is producing, which is key to their success. It’s a privileged position to be in.
๐ฉ๐ถ๐ฎ๐ฝ๐น๐ฎ๐: ๐ก๐ฎ๐๐ถ๐ด๐ฎ๐๐ถ๐ป๐ด ๐ฎ ๐ง๐ถ๐ด๐ต๐๐ฒ๐ฟ ๐ฃ๐ฎ๐๐ต
Viaplay, fresh from a recent retreat and refocus into their core Nordic and Dutch markets, has a rockier path. They aim to carve more profitable path within a concentrated footprint focusing on local content and sports. Interestingly, Viaplay ARPU is much higher ($20.78) than Netflix ($10.87 in EMEA), I assume driven by premium sports being a core part of their mix. But without the economies of scale that 278m subs offer, profitability remains challenging. However, they are making progress.
๐ง๐ต๐ฒ ๐๐ผ๐บ๐บ๐ผ๐ป ๐๐ฎ๐ฐ๐ฒ๐: ๐๐ผ๐ฐ๐ฎ๐น ๐๐ผ๐ป๐๐ฒ๐ป๐
Key to both strategies is local content. Other major ‘global’ streamers (read: major US streamers) face challenges fully engaging diverse local audiences (without Netflix’s deep pockets). Iโm not even convinced Disney has enough content to stand alone internationally (I recently churned off myself) nor do I think a bundled Paramount and Peacock (e.g.) would stand up.
Perhaps more innovative structures are needed, pushing these mega (‘global’) studio brands back a touch (if theyโre able to swallow that much pride) and relying on local streamers with longstanding customer relationships and deep local understanding. In many EMEA markets, free-to-air broadcasters lead in local content provision, perhaps there are opportunities like Paramount falling behind Channel 5 in the UK (e.g.) – Netflix did speak of how important the ad tier was for new subscriber growth (engagement at a much lower price).
With US capital markets and the bargain basement price of some of these assets, partnering or purchasing more international brands could be an opportunity rather than these studios who are seemingly only intent on swallowing up each other. Though if treading this path perhaps donโt take a typical US approach. Ellison apparently wants his merged Paramount/Skydance business to come up with a new relationship with tech, perhaps he has the vision to come up with a new relationship with how they deal with International too!
By the Numbers
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๐1 2024:
Revenue: $18,929m
Net Income: $4,479m (24%)
Subscribers: 278m
ARPU: $11.36
Mar Cap: $277.09B
Mar Cap per Sub: $988
๐ฉ๐ถ๐ฎ๐ฝ๐น๐ฎ๐ ๐1 2024:
Revenue: 9,241m SEK | $869m
Net Income: 485m SEK | $45m (5%)
Subscribers: 6.9m
ARPU: 222 SEK | $20.89
Mar Cap: 4.76B SEK | $448m
Mar Cap per Sub: 687 SEK | $64