Netflix, John Tucker And Bloomberg discussed on Bloomberg Radio New York Show


This is Bloomberg daybreak weekend our global look ahead of the top stories in the coming week from our daybreak anchors all around the world and just ahead on the program Showtime for Netflix but can the streaming giant deliver I'm John Tucker in New York I'm Annie Morris in Washington with the gubernatorial race in Virginia and how it might have national implications I'm Caroline hedge in London Poland's collision course with the European Union I'm Brian Curtis based in Hong Kong We look at workers in Vietnam fleeing factories in the southern part of the country The impact on global supply chains That's all straight ahead on Bloomberg daybreak On Bloomberg 11th New York Bloomberg 99 one Washington D.C. Bloomberg one O 6 one Boston Bloomberg 9 67 Francisco Syria's exam one 19 and around the world on Bloomberg radio dot com and via the Bloomberg business act Hi everybody I'm John Tucker Let's start today's program with a look at how Netflix is doing We have Bloomberg intelligence media analysts get to rank it often with us to give us a preview of their earnings What are you looking for for earnings from Netflix usually it's all about subscriber growth right Absolutely John yes So this is a subscriber story quarter in and quarter out That is the one number that kind of moves the stock And so what Netflix has said for the third quarter is they're expecting about three and a half million new subscribers to have joined the platform This is a service that has about 210 million global members and so obviously everybody is going to look to see if they can actually surpass that three and a half million guidance But I think the bigger number and this is really the number that kind of where the movement of the stock is going to hinge on is going to be the four Q subscriber guidance And the reason that this four Q subscriber guidance is so important is because everybody expects this to finally be the quarter when Netflix can put behind all of this hangover that it's had from COVID-19 They had a blowout year last year but then this year has been just the exact opposite extremely lackluster But everybody's kind of hoping that with four Q that is going to be an inflection point in the story In inflection point because of what We're over the hangover at this point What's the impetus for this Yes So a couple of different things So one is we're people are kind of finally returning to normal and we had that blowout in 2020 and then after that because of that blowout then we had tougher comparisons coming into the first half of 2021 But the bigger problem for them really was that their full content production was completely shut down And so you had a much much lighter content production slate coming into 2021 But now it's again ramping up and actually with the fourth quarter we're going to have some of their biggest titles that are going to come on the platform a little bit later this year Be it a Witcher or a Cobra Kai and so that they normally expect those kind of pussy titles to really get the subscribers in back onto the platform Of course one of the things that's been in the news late controversy over the Dave Chappelle comedy feature with some jokes about transgender people to controversies like this have the potential to hurt subscriber numbers Yes So Netflix really is not new to controversy So we've kind of seen some of things happen like this before So they did have a couple of years ago they had 13 Reasons Why they had all of that generated a lot of controversy and there was a lot of backlash from viewers from subscribers kind of saying we're going to cancel Netflix and things like that But we never really saw it have a material impact on subscriber additions So yeah it does generate a lot of buzz a lot of backlash but no financial impact material It might be last person left who hasn't seen squid games Gita I think so because a 111 million people have already watched it Who are these people Well first of all what is the show I don't get it Okay So this is a non English so it's a Korean show It's a fictional show which kind of deals with people who are in debt and they're heavily indebted and it's kind of like a hunger game set up if you will And so you have all these people kind of competing for this big cash price And it's really taking the world by storm It's become their biggest show ever as I just mentioned over the first show to actually cross the 100 million milestone for Netflix So absolutely huge And I think what is kind of really interesting here is first of all it's a non English show It's relatively unknown a concept like this is unknown and just for a show like this to have that much of influence I mean it's kind of breaking Internet it's breaking all these memes all over the place Just for it to become this wild success and phenomenon just kind of speaks to the power of Netflix to be such a big influencer Okay you said it's from South Korea Does that mean it costs less for Netflix What's the cost of production for a hugely popular show like this Yes So typically Netflix has really kind of a gone into or they've gone away from just relying on English language shows produced in Hollywood So they've tried to really diversify that And what that's done is not only does it really increase the diversity of shows on the platform itself It makes shows more authentic but it also reduces the cost of production for them dramatically So while a season of Stranger Things might cause some something like about a $100 million to produce A show like squid game would be one 8 or one tenth the cost of that And if it can have the same effect on your subscriber numbers I mean Netflix is going to do more and more of this going forward because it's just such a great boost to their bottom line and to their margin profile Always a pleasure we appreciated Bloomberg intelligence media analysts at preview of Netflix earnings And just to hit on Bloomberg daybreak week and having trouble finding what you want

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