Netflix After Q2 2019 Post-Peak or Strategic Reset?

The 20,000 Foot View: With a market capitalisation            times its current annual net income, Netflix suddenly finds itself scrambling to justify its price-to-earnings ratio. The July            earnings call knocked            off the market capitalisation of the poster-child of the streaming era in a matter of two days – equivalent to the entire market capitalisation of Snap Inc, another former darling of the tech and media landscape. Peak streaming is meeting peak attention and the clash is pronounced and severe for Netflix. With well-funded direct to consumer            threats just around the corner, Netflix needs to recalibrate both its engagement and its revenue mix to win over the next            million.

Key Findings

           of US consumers use Netflix on a daily basis
• The majority            US            year olds are Netflix            active users (DAUs)
• Netflix domestic            declined by            thousand in            2019
• Netflix international            growth in            declined by            to           
• Localisation strategy            more than just original content
• The next            Netflix subscribers will come from            markets
• Netflix paying            are            more likely than the            consumer to pay attention to            that sponsor shows than those            just have ads
           of Netflix’s paid subscribers respond favourably to relevant ads –            above the weighted average
• US Netflix            are slightly more tolerant of            appearing on a streaming video            de-mand (SVOD) service
• US Netflix            over-index for gaming behaviour

Companies and brands mentioned in this report: Apple TV+, Assassins Creed, Cambridge, Disney +, Game of Thrones, HBO, Kahn Academy, Master Class, Mirriad, MIT, Netflix, Nike, Open University, Snap Inc, Stanford, Stranger Things, Warnerflix, WarnerMedia