![]() ![]() This partnership with Microsoft will see Netflix contain traditional advertisements for the first time. Just six months after the initial announcement, Netflix will be rolling out their lower cost, advertising supported tier to twelve different countries. There are big changes coming for the company over the next few months. Taking out the impact of foreign currency movements showed that structural revenue had actually increased by 13%. dollar has meant foreign earnings are converting back to less USD. Year on year revenue has increased 6%, though this was impacted by changes in exchange rates which have been unusually volatile this year. They compared this to the profit being generated by Netflix of between $5 - $6 billion per year. They also highlighted how expensive it is to grow a streaming service, suggesting that their competitors are likely to be operating at combined annual losses of around $10 billion. In the U.S., Netflix takes up 7.6% of users ‘TV time,’ which is 2.6 times the number for Amazon Prime and 1.4 times the amount for Disney+ and Hulu. Netflix were eager to point out that their service offers a higher level of engagement than any other streaming network. Amazon Prime, Disney+, Apple TV+, Hulu, HBO Max, Paramount+ and many, many others are all now fighting for a share of the streaming pie. In a sector that Netflix created, they now share space with a mind boggling number of alternative streaming services. Netflix also used their letter to shareholders to talk about their increasing level of competition. This figure was a mile higher than the $2.10 that had been expected. Net income decreased from a year ago from $1.44 billion to $1.4 billion, and earnings per share were down 2.8% to hit $3.10. The large increase in subscriber numbers was the headline and while earnings per share were down compared to the same time last year, they were also significantly higher than analysts estimates. The relief was palpable on the earnings call, with chief executive Reed Hastings saying “Thank God we’re done with shrinking quarters. ![]()
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December 2022
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