April 17, 2025 • 18 mins
Netflix reported first-quarter profit that exceeded Wall Street forecasts, boosted by a recent price increase and a strong slate of programming across the globe, like the hit UK series Adolescence. The owner of the world’s most popular online TV network said in a statement Thursday that earnings rose 25% to $6.61 a share, easily beating analysts’ estimates of $5.68. Sales grew 13% to $10.5 billion, in line with projections. This is the first time Netflix has reported financial results without disclosing how many customers it added or lost — the main yardstick investors previously used to gauge the company’s performance. Management is forcing investors to judge its success or failure based on more traditional financial metrics. The company boosted operating income by 27% to $3.3 billion, beating expectations of $3 billion. Its operating margin of 31.7% was more than three percentage points above its own forecast.
For instant reaction and analysis, hosts Carol Massar and Tim Stenovec speak with Bloomberg News Entertainment Reporter Lucas Shaw and Mark Douglas, President and CEO of MNTN.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:09):
This is a breaking news update from Bloomberg.
Speaker 3 (00:12):
Instant reaction and analysis from our three thousand journalists and
analysts around the world. Okay, Netflix shares finally bouncing around
a little bit, up about two percent in the after hours.
The company did just report first quarter profit that exceeded estimates.
It was boosted by a recent price increase, a strong
slate of programming across the globe, like the UK hit
(00:33):
series Adolescents. I want to bring Lucas Shaw in right now.
He's been all over this story, and he's all over
this company and has been for years.
Speaker 2 (00:40):
Lucas.
Speaker 3 (00:41):
This report is unique because it's the first time they
haven't reported subscriber data. We knew this was coming. Everybody
knew this was coming. It is there a way to
back into that number or our investors just ignoring that now?
Speaker 1 (00:54):
Well, I think you can try to figure it out,
at least in the first couple quarters by by looking
at revenue and modeling out how many people that they
added and factor in the price increases. But look, a
lot of other companies get measured based on sales and profit.
There's no read the Netflix can't it's a little less
(01:15):
fun for me. I think it's a little less fun
for all of us. We'd appreciate the added transparency, but
for the you know, they made sure that in the
first quarter of not doing that, they met or beat
on pretty much every metric.
Speaker 4 (01:26):
What for you, Lucas also stands out? I mean we
were just talking about too, you know, and that it
has been an outperformer. We've seen some movements up certainly
this week. But what for in this release? There's a
lot there that really stood out for you? Is it
some of the content that they're offering. We talked a
little bit about live content and sports with our TV colleagues,
but I'm just curious for you what's significant here.
Speaker 1 (01:48):
I was a little confused. You know, they issue this
letter to shareholders every quarter, and they had this long
section that was titled competition that didn't really talk about
competition that much. They spent a lot of time talking
about how much they're investing in production overseas, and then
they had a chart from the UK showing their growth
(02:10):
there and how they're only behind BBC and ITV and
I think important to Netflix on television screens, they're ahead
of YouTube because Netflix really doesn't like that. In the US,
YouTube can now say that more people watch it than Netflix.
So I sort of read that as like a long
effort to show ways in which it's both ahead of
all of it sort of traditional Hollywood competitors, and in
some of these foreign markets on televisions it's still ahead
(02:33):
of YouTube. I think that's where Netflix feels the most
competitive pressure at the moment.
Speaker 3 (02:37):
Does it still feel like it can? I mean, Lucas,
this is a company that you know, years ago would
say it's competing with anything that anyone is doing looking
at a screen, you know, whether that's gaming, whether that's
watching traditional linear TV, whether it's looking at TikTok for example.
I think there was a year they called out TikTok
specifically or quarter they did that. Do they still think
about all those are Do they still think about competition
(02:58):
that way?
Speaker 1 (03:00):
Yeah, the company still thinks of anything that is leisure
time as competition.
Speaker 2 (03:04):
How much it talks about.
Speaker 1 (03:06):
Some of those other behaviors I think depends on the quarter.
Right Like right now, they may be more focused on
your traditional video entertainment programming. There's some quarters I feel
like they oftentimes do that when they have.
Speaker 2 (03:18):
Like a really killer quarter because they.
Speaker 1 (03:20):
Don't really need to spend any time on their immediate
competition because everyone can see that it's going very well.
And so then they talk sort of loftily about like
Fortnite or TikTok or sleep or any of these other topics.
Speaker 4 (03:32):
How does it feel to not get the subscriber numbers?
Subscription numbers?
Speaker 2 (03:36):
I mean, I don't like it.
Speaker 1 (03:37):
Who would we all like using data to evaluate a company.
It was always the easiest way to know if things
were going well or not. And it feels a little
even though they would push back on this, it does
feel a little bit like they're trying to hide it
because they know that their subscriber growth is going to
be good, but not as good as it used to be,
(03:58):
and so it allows them, you know, they can only
do so much to adjust the subscriber numbers, but increasing
and decreasing subscribers is now just one of a few
levers they have, right because they're going to raise prices,
they're going to have advertising, they're going to do a
lot of different things that allows them to kind of
shift people from a metric that is maybe a little
(04:19):
harder to control to one that's a little easier for them, Lucas.
Speaker 3 (04:22):
As we were preparing for these results, we saw this
narrative emerge that this is, you know, a tech company
that could be at least a little shielded from the
chaos that we're seeing when it comes to tariffs and
when it comes to trade, because well, look at what
they're dealing in. But at the same time, it is
a discretionary expense for consumers.
Speaker 2 (04:42):
So I'm wondering.
Speaker 3 (04:43):
How you view that and whether or not if we
do see maybe some sort of downturn as a result
of higher prices from tariffs from trade, that could actually
be a risk to the company.
Speaker 1 (04:52):
Yeah, I think consensus is that they're to your point,
they're more insulated both because look that, yeah, they don't
deal in any hard goods, so there's the tariffs don't
have a direct impact unless you start to see other countries,
you know, impose price increases on services, which is possible
but not something that we've seen yet. You know, they're
(05:13):
a little bit impacted in the cost of making things
because of just pariffs will impact factors that go into production,
But in terms of discretionary income, look, they keep raising prices,
maybe some people will decide Netflix just isn't worth it.
Netflix has the best churn, which is sort of the
cancelation rate in the streaming business. It's way ahead of
(05:33):
everyone else, and so you have to think that when
people are looking at what they're going to cancel, it
will not be at the top of that list. It
will probably be close to or at the bottom of
that list. So again, I think they're in better position
than most. But look, they're big enough that even a
slight increase in churn is a headache for them, So
they're not immune. I just think it depends on, you know,
if we go from a trade war into a full
(05:54):
on recession or if we just have like this period
of uncertainty. I think just uncertainty is fine for Netflix.
You know, recession's not good for anyone.
Speaker 4 (06:02):
Hey, one last quick question for you, Lucas on the
analys call, what is the question that must be asked?
Speaker 2 (06:10):
Good question?
Speaker 1 (06:14):
I mean, I expect they'll get a bunch of normal
questions about sports and advertising. I guess I'm probably most
curious about advertising. They keep talking about how they're close
to this being a material part of their business. They're
teasing it out a little bit more in their shareholder letter,
but we don't. We haven't really had a material any
(06:35):
material numbers on that business other than like these sort
of vague monthly active user figures. So I'd love for
them to go into more detail. I don't expect that
they will.
Speaker 4 (06:43):
All right, great stuff, Hey, thank you so much, have
a great weekend. Bloomberg News entertainment reporter Lucas Shaw with
a breakdown on Netflix. Just want to drive everybody's attention
because I'm looking at it in the aftermarket and we're
now seeing the stock up about three point six percent here.
Let me just pull it up once again on my
Bloomberg yet almost three point eight percent as we speak.
Netflix reported first quot a profit that exceeded Wall Street forecasts,
(07:06):
boosted by a recent price increase and a strong slate
of programming across the globe like the hit UK series Adolescence.
Keep in mind, this is the first time that the
company has reported financial results without disclosing how many customers
it added are lost, something we talked about with Lucashaw,
which has been such a crucial yardstick excuse me to
gauge the company's performance. But again, the stock up about
(07:28):
three point nine percent.
Speaker 3 (07:29):
Hey, I want to bring in Mark Douglass right now.
He's president and CEO of Mountain. It's the company that
has software that helps companies target advertising when it comes
to smart TVs. He joins us here in the Bloomberg
Interactive Brokers studio. I want to pick up exactly where
Lucas left off, and that's advertising. We don't know a
lot about how much revenue is actually coming from advertising.
(07:51):
They don't have a specific place for it in the
shareholder letter today. How much do you think they're getting.
Speaker 5 (07:58):
I think it's still pretty small for them. What's really
important is half of all new subscribers they reported previously
in previous quarters are buying the ad supported tier.
Speaker 2 (08:10):
What does that tell you?
Speaker 5 (08:11):
So, it tells me they have a growing backlog of
revenue that's going to occur in the future because essentially
every person that gets the ad supported tier is currently undermonetized.
But despite that, they have record breaking earnings. So imagine
what the earnings are going to be when they are
fully monetized, which would effectively double the revenue per customer
(08:35):
for their new customer.
Speaker 3 (08:36):
You must have spent time with the advertising tier of Netflix,
just be given your business.
Speaker 5 (08:41):
Yeah, well some I know a lot of the key people.
Speaker 2 (08:44):
But no.
Speaker 3 (08:44):
But I mean like the experience because I think a
lot of people who have been using Netflix for years
we don't have the advertising plan.
Speaker 5 (08:52):
So I don't.
Speaker 3 (08:52):
But if you're watching, like if you're watching something on YouTube,
for example, and an AD is just thrown in there,
it can be pretty eruptive. Yeah, what's the experience on Netflix.
Speaker 5 (09:03):
It's it's like watching any other streaming service ad supported
streaming service. There are pods of ads. There's just a
lot fewer ads right now.
Speaker 2 (09:11):
How well is it targeted?
Speaker 5 (09:13):
They I don't think it's very targeted. I think Netflix
probably an issue right it is. It's because Netflix is
kind of starting from the big brand advertiser perspective and
to really fully monetize that that there, you know, they
have to take market share away from the entire rest
of the industry because those big brand advertisers, they're not
(09:33):
increasing their spend. So so I think that's part of
the challenge they have in monizing monetizing the ads. But
they will get there, and when that kicks in, it's
going to be the same way password cracking down on
password sharing.
Speaker 3 (09:46):
You know, I just want to My experience with advertising
was in one of these I don't know, like a
similar service was when Amazon decided to kind of get
rid of the free yeah Prime video. And I'll tell
you like, I was like watching something Carol and just
cut out for an ad at a terrible time.
Speaker 1 (10:05):
Right.
Speaker 3 (10:05):
It was thrown in a really sloppy way. It's only
I think three dollars more a month to pay for it,
and I was like, I'm done.
Speaker 2 (10:11):
That's it.
Speaker 3 (10:12):
No more from like a you know, I don't know
what's wrong with me, but I'm like, I'm not even
going to partake in this.
Speaker 2 (10:16):
I've done with it.
Speaker 4 (10:17):
It's amazing how we as consumers of video and content
right where we used to be we didn't have a choice,
you know, in linear television where you had to stop,
you know, or you had a commercial and you ran
the bathroom or something and like, but.
Speaker 3 (10:28):
Now it's program okay, I'm just before and we love you,
we love you, okay.
Speaker 5 (10:36):
All right?
Speaker 4 (10:36):
So then how much I mean we were talking about
how Netflix has been a bit of an app performer
this year. It's more than nine percent here, So when
do we start to see those numbers and that enthusiasm
that you're talking about as a result kind of start
to show up. Well, I think, and is the stock
underpriced because of it?
Speaker 5 (10:52):
I think Netflix. I think Netflix is somewhat immune because
think of it this way. The first thing you get
is the last thing you cancel, and Netflix for streaming
is definitely the first thing you get. It's the first thing.
There's data that shows it's you know, you turn on
the TV. The first thing you hit is let me
go see what's on Netflix. And remember the highest price
(11:13):
offering the highest priced subscription, Yeah, costs sixty eight percent
more than their lowest price, so you can just like
kind of go, you want to save some money, you
just downgrade the subscription. You don't need to cancel it.
Speaker 2 (11:26):
So I think for them to get to the.
Speaker 5 (11:27):
Point where people are canceling like it, it's nearly impossible.
Speaker 4 (11:31):
You can't put food on the I'm all getting Hopefully
nobody has to do that.
Speaker 3 (11:36):
Just sorry, the squid game on the table exactly.
Speaker 2 (11:41):
Mark.
Speaker 3 (11:42):
When it comes to the landscape out there, Yeah, okay,
I know first mover advantage is going to be part
of your answer here. But Netflix stands apart from the
competitors out there, and part of it is that some
of them were legacy media companies that were trying to
adapt to this new world that Netflix helped pioneer. But
why is Netflix so good at this and everybody else
(12:03):
is struggling?
Speaker 5 (12:03):
Well, my friends at Disney would properly this.
Speaker 3 (12:07):
I mean you know they would. They disagree that Netflix
does it better? Well, I think Netflix, do you think
they would? It's the thing is they might say we
have blue and Netflix doesn't.
Speaker 2 (12:14):
But that's it.
Speaker 5 (12:15):
Yeah, what what well they have? They have a lot
more sports. But I agree with what you're saying, which
is when you turn on the TV, Netflix is generally
the first thing you're going to check. And and that's
just an insane advantage because it allows you to turn
shows that maybe people wouldn't have watched, like WWE, and
(12:36):
turn them in the top ten hits on Netflix just
because you know, you you sit down on the couch,
turn on the TV. WWE is on and it's live,
why you know what, and it's there for you to watch.
It gives us this incredible power to turn average content
into really big hits, and to turn great content into
like like NFL sport NFL games in the nearly Super
(12:59):
Bowl on a regular weekend.
Speaker 2 (13:01):
You're more of a UFC person.
Speaker 4 (13:03):
Yeah, totally not. Advertisers, where do they want to put
their ads in terms of content? Is it the live
sports stuff?
Speaker 5 (13:10):
Is it?
Speaker 4 (13:10):
What is it? Do they care?
Speaker 2 (13:11):
Are they picky?
Speaker 5 (13:13):
It depends on the advertiser, but generally people lives. You
can sell live sports all day long.
Speaker 2 (13:19):
From now.
Speaker 5 (13:20):
We're kind of not in that game. We're not dealing
with brand advertisers. But I know when I talk to
all the big agencies and things like that, they it's
all about live sports. They just it's an insatiable appetite streaming.
Speaker 4 (13:33):
They don't care.
Speaker 5 (13:34):
Yeah, streaming live sports. ESPN is now rolling out streaming
live sports and people are I know from Disney, people
are just lining up to buy it. And it's every
streamer is in the process of doing that, and so
it's always that. After that, I think the appetite changes
a lot, but there's just something about the engagement live
(13:56):
sports that advertisers love.
Speaker 2 (13:58):
Yeah.
Speaker 3 (13:58):
The November twenty twenty four Taylor Serrano fight on Netflix
became the most watched professional women's sports event in history.
They say that we're well with the upcoming rematch. Were
poised for another groundbreaking night that will further elevate the
profile of women athletes. In addition, Netflix is opted into
a second game for Christmas twenty twenty five, where they'll
be the home of the NFL for Christmas Day. My
(14:20):
sister was watching that last year on Christmas Day. They
say live efforts have primarily focused on the US. We
expect to extend this strategy to other countries over time.
How big of an opportunity is that for Netflix given
what you told me about the ad demand for live sports,
huge for Netflix if they expand this outside the US.
Speaker 1 (14:36):
Yeah.
Speaker 5 (14:37):
I mean if I was a sportslee, if I was
Formula one, I would literally just live in front of
Surrended's house, just like, let's do a deal.
Speaker 2 (14:46):
Why do you think that you haven't done well?
Speaker 5 (14:47):
They already are doing that because Half One's become so
popular with the foot drive a match. If the gate
if they just last year, was like.
Speaker 3 (14:57):
So why is it not there now? Do you think
is it a long term deals that are in place already?
Speaker 2 (15:02):
Yeah?
Speaker 5 (15:02):
I think it's long term deals. I wouldn't be surprised
if Formula one comes there they go to Europe. Of course,
football in Europe, I mean the the it's just something there.
Speaker 2 (15:12):
But Netflix is smart.
Speaker 5 (15:13):
They're going to sports that are like like you know,
female boxing, that wouldn't necessarily be something that would attract
the huge audience and get the highest rates, and they're
turning it into the most watched female sports event in history.
And this is the superpower that they have. It's the
advantage that they just have over every other streaming network
(15:35):
by being the first thing you click when you turn
on your TV.
Speaker 4 (15:38):
I just want to mention we are talking with Mark Douglass,
President and CEO of Mountain Shares of Netflix. They're up
about four point six percent. This is the company logs
record profit in the quarter, revenue tracking above the midpoint
of its twenty twenty five forecast range, and it does
see second quarter revenue. So the current quarter that we're
in eleven point zero four billion, the estimate is ten
(15:59):
point eighty eight bill. And when it comes to advertisers,
does everybody else want to just be Netflix? Especially when
it comes to streaming? What do you hear from advertisers?
Is there first choice always Netflix?
Speaker 5 (16:11):
Not for I think people are very intrigued by advertising
on Netflix, but at the end of the day, they
want the consumer wherever they are. And so Netflix started
their ads here with very very high pricing and they've
had to kind of come back down the reality and
read tools. So I don't think advertisers like Netflix are nothing.
(16:31):
But Netflix has the most viewers, so they potentially have
the most ad space over time.
Speaker 4 (16:36):
One last quick question. We know you're going to join
our TV colleagues in just a moment, but a federal
judge rule that Google illegally monopolized online ad technology markets
for advertising exchanges and tools used by websites to sell
ad space. So they say they, you know, we're doing
anti competitive acts to acquire maintainment opoly power in these markets.
(16:57):
So what does that possibly mean at this stamp don't.
Speaker 5 (17:01):
I don't think Google is losing any sleep really that ruling.
If anything, it's their dream scenario. It's the small it's
a small part of their business. But the you know,
US federal government has been very focused on it from
an anti trust and in fact they're probably you know,
it's like, yeah, focus it's focused on that, don't focus
on search and AI, and so to me, it's it's
(17:23):
almost a dream scenario. For the best dream is that
they're left alone. But if they have to, you know,
kind of kind of focus on that and even potentially
give up that great scenario for them. I don't think
any investor should be worried about Google losing that part
of their at business.
Speaker 4 (17:40):
All right, kind of interesting different perspective, and we will
say that Alphabet Chaos were down about one point four
percent today, a little bit of a swing. Mark, Thank
you so much, Mark Douglass. He's president CEO Mountain, the
company of software that helps companies target advertising a smart TV.
So good to get his perspective.
Speaker 3 (17:55):
Mark, thank you
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:09):
This is a breaking news update from Bloomberg.
Speaker 3 (00:12):
Instant reaction and analysis from our three thousand journalists and
analysts around the world. Okay, Netflix shares finally bouncing around
a little bit, up about two percent in the after hours.
The company did just report first quarter profit that exceeded estimates.
It was boosted by a recent price increase, a strong
slate of programming across the globe, like the UK hit
(00:33):
series Adolescents. I want to bring Lucas Shaw in right now.
He's been all over this story, and he's all over
this company and has been for years.
Speaker 2 (00:40):
Lucas.
Speaker 3 (00:41):
This report is unique because it's the first time they
haven't reported subscriber data. We knew this was coming. Everybody
knew this was coming. It is there a way to
back into that number or our investors just ignoring that now?
Speaker 1 (00:54):
Well, I think you can try to figure it out,
at least in the first couple quarters by by looking
at revenue and modeling out how many people that they
added and factor in the price increases. But look, a
lot of other companies get measured based on sales and profit.
There's no read the Netflix can't it's a little less
(01:15):
fun for me. I think it's a little less fun
for all of us. We'd appreciate the added transparency, but
for the you know, they made sure that in the
first quarter of not doing that, they met or beat
on pretty much every metric.
Speaker 4 (01:26):
What for you, Lucas also stands out? I mean we
were just talking about too, you know, and that it
has been an outperformer. We've seen some movements up certainly
this week. But what for in this release? There's a
lot there that really stood out for you? Is it
some of the content that they're offering. We talked a
little bit about live content and sports with our TV colleagues,
but I'm just curious for you what's significant here.
Speaker 1 (01:48):
I was a little confused. You know, they issue this
letter to shareholders every quarter, and they had this long
section that was titled competition that didn't really talk about
competition that much. They spent a lot of time talking
about how much they're investing in production overseas, and then
they had a chart from the UK showing their growth
(02:10):
there and how they're only behind BBC and ITV and
I think important to Netflix on television screens, they're ahead
of YouTube because Netflix really doesn't like that. In the US,
YouTube can now say that more people watch it than Netflix.
So I sort of read that as like a long
effort to show ways in which it's both ahead of
all of it sort of traditional Hollywood competitors, and in
some of these foreign markets on televisions it's still ahead
(02:33):
of YouTube. I think that's where Netflix feels the most
competitive pressure at the moment.
Speaker 3 (02:37):
Does it still feel like it can? I mean, Lucas,
this is a company that you know, years ago would
say it's competing with anything that anyone is doing looking
at a screen, you know, whether that's gaming, whether that's
watching traditional linear TV, whether it's looking at TikTok for example.
I think there was a year they called out TikTok
specifically or quarter they did that. Do they still think
about all those are Do they still think about competition
(02:58):
that way?
Speaker 1 (03:00):
Yeah, the company still thinks of anything that is leisure
time as competition.
Speaker 2 (03:04):
How much it talks about.
Speaker 1 (03:06):
Some of those other behaviors I think depends on the quarter.
Right Like right now, they may be more focused on
your traditional video entertainment programming. There's some quarters I feel
like they oftentimes do that when they have.
Speaker 2 (03:18):
Like a really killer quarter because they.
Speaker 1 (03:20):
Don't really need to spend any time on their immediate
competition because everyone can see that it's going very well.
And so then they talk sort of loftily about like
Fortnite or TikTok or sleep or any of these other topics.
Speaker 4 (03:32):
How does it feel to not get the subscriber numbers?
Subscription numbers?
Speaker 2 (03:36):
I mean, I don't like it.
Speaker 1 (03:37):
Who would we all like using data to evaluate a company.
It was always the easiest way to know if things
were going well or not. And it feels a little
even though they would push back on this, it does
feel a little bit like they're trying to hide it
because they know that their subscriber growth is going to
be good, but not as good as it used to be,
(03:58):
and so it allows them, you know, they can only
do so much to adjust the subscriber numbers, but increasing
and decreasing subscribers is now just one of a few
levers they have, right because they're going to raise prices,
they're going to have advertising, they're going to do a
lot of different things that allows them to kind of
shift people from a metric that is maybe a little
(04:19):
harder to control to one that's a little easier for them, Lucas.
Speaker 3 (04:22):
As we were preparing for these results, we saw this
narrative emerge that this is, you know, a tech company
that could be at least a little shielded from the
chaos that we're seeing when it comes to tariffs and
when it comes to trade, because well, look at what
they're dealing in. But at the same time, it is
a discretionary expense for consumers.
Speaker 2 (04:42):
So I'm wondering.
Speaker 3 (04:43):
How you view that and whether or not if we
do see maybe some sort of downturn as a result
of higher prices from tariffs from trade, that could actually
be a risk to the company.
Speaker 1 (04:52):
Yeah, I think consensus is that they're to your point,
they're more insulated both because look that, yeah, they don't
deal in any hard goods, so there's the tariffs don't
have a direct impact unless you start to see other countries,
you know, impose price increases on services, which is possible
but not something that we've seen yet. You know, they're
(05:13):
a little bit impacted in the cost of making things
because of just pariffs will impact factors that go into production,
But in terms of discretionary income, look, they keep raising prices,
maybe some people will decide Netflix just isn't worth it.
Netflix has the best churn, which is sort of the
cancelation rate in the streaming business. It's way ahead of
(05:33):
everyone else, and so you have to think that when
people are looking at what they're going to cancel, it
will not be at the top of that list. It
will probably be close to or at the bottom of
that list. So again, I think they're in better position
than most. But look, they're big enough that even a
slight increase in churn is a headache for them, So
they're not immune. I just think it depends on, you know,
if we go from a trade war into a full
(05:54):
on recession or if we just have like this period
of uncertainty. I think just uncertainty is fine for Netflix.
You know, recession's not good for anyone.
Speaker 4 (06:02):
Hey, one last quick question for you, Lucas on the
analys call, what is the question that must be asked?
Speaker 2 (06:10):
Good question?
Speaker 1 (06:14):
I mean, I expect they'll get a bunch of normal
questions about sports and advertising. I guess I'm probably most
curious about advertising. They keep talking about how they're close
to this being a material part of their business. They're
teasing it out a little bit more in their shareholder letter,
but we don't. We haven't really had a material any
(06:35):
material numbers on that business other than like these sort
of vague monthly active user figures. So I'd love for
them to go into more detail. I don't expect that
they will.
Speaker 4 (06:43):
All right, great stuff, Hey, thank you so much, have
a great weekend. Bloomberg News entertainment reporter Lucas Shaw with
a breakdown on Netflix. Just want to drive everybody's attention
because I'm looking at it in the aftermarket and we're
now seeing the stock up about three point six percent here.
Let me just pull it up once again on my
Bloomberg yet almost three point eight percent as we speak.
Netflix reported first quot a profit that exceeded Wall Street forecasts,
(07:06):
boosted by a recent price increase and a strong slate
of programming across the globe like the hit UK series Adolescence.
Keep in mind, this is the first time that the
company has reported financial results without disclosing how many customers
it added are lost, something we talked about with Lucashaw,
which has been such a crucial yardstick excuse me to
gauge the company's performance. But again, the stock up about
(07:28):
three point nine percent.
Speaker 3 (07:29):
Hey, I want to bring in Mark Douglass right now.
He's president and CEO of Mountain. It's the company that
has software that helps companies target advertising when it comes
to smart TVs. He joins us here in the Bloomberg
Interactive Brokers studio. I want to pick up exactly where
Lucas left off, and that's advertising. We don't know a
lot about how much revenue is actually coming from advertising.
(07:51):
They don't have a specific place for it in the
shareholder letter today. How much do you think they're getting.
Speaker 5 (07:58):
I think it's still pretty small for them. What's really
important is half of all new subscribers they reported previously
in previous quarters are buying the ad supported tier.
Speaker 2 (08:10):
What does that tell you?
Speaker 5 (08:11):
So, it tells me they have a growing backlog of
revenue that's going to occur in the future because essentially
every person that gets the ad supported tier is currently undermonetized.
But despite that, they have record breaking earnings. So imagine
what the earnings are going to be when they are
fully monetized, which would effectively double the revenue per customer
(08:35):
for their new customer.
Speaker 3 (08:36):
You must have spent time with the advertising tier of Netflix,
just be given your business.
Speaker 5 (08:41):
Yeah, well some I know a lot of the key people.
Speaker 2 (08:44):
But no.
Speaker 3 (08:44):
But I mean like the experience because I think a
lot of people who have been using Netflix for years
we don't have the advertising plan.
Speaker 5 (08:52):
So I don't.
Speaker 3 (08:52):
But if you're watching, like if you're watching something on YouTube,
for example, and an AD is just thrown in there,
it can be pretty eruptive. Yeah, what's the experience on Netflix.
Speaker 5 (09:03):
It's it's like watching any other streaming service ad supported
streaming service. There are pods of ads. There's just a
lot fewer ads right now.
Speaker 2 (09:11):
How well is it targeted?
Speaker 5 (09:13):
They I don't think it's very targeted. I think Netflix
probably an issue right it is. It's because Netflix is
kind of starting from the big brand advertiser perspective and
to really fully monetize that that there, you know, they
have to take market share away from the entire rest
of the industry because those big brand advertisers, they're not
(09:33):
increasing their spend. So so I think that's part of
the challenge they have in monizing monetizing the ads. But
they will get there, and when that kicks in, it's
going to be the same way password cracking down on
password sharing.
Speaker 3 (09:46):
You know, I just want to My experience with advertising
was in one of these I don't know, like a
similar service was when Amazon decided to kind of get
rid of the free yeah Prime video. And I'll tell
you like, I was like watching something Carol and just
cut out for an ad at a terrible time.
Speaker 1 (10:05):
Right.
Speaker 3 (10:05):
It was thrown in a really sloppy way. It's only
I think three dollars more a month to pay for it,
and I was like, I'm done.
Speaker 2 (10:11):
That's it.
Speaker 3 (10:12):
No more from like a you know, I don't know
what's wrong with me, but I'm like, I'm not even
going to partake in this.
Speaker 2 (10:16):
I've done with it.
Speaker 4 (10:17):
It's amazing how we as consumers of video and content
right where we used to be we didn't have a choice,
you know, in linear television where you had to stop,
you know, or you had a commercial and you ran
the bathroom or something and like, but.
Speaker 3 (10:28):
Now it's program okay, I'm just before and we love you,
we love you, okay.
Speaker 5 (10:36):
All right?
Speaker 4 (10:36):
So then how much I mean we were talking about
how Netflix has been a bit of an app performer
this year. It's more than nine percent here, So when
do we start to see those numbers and that enthusiasm
that you're talking about as a result kind of start
to show up. Well, I think, and is the stock
underpriced because of it?
Speaker 5 (10:52):
I think Netflix. I think Netflix is somewhat immune because
think of it this way. The first thing you get
is the last thing you cancel, and Netflix for streaming
is definitely the first thing you get. It's the first thing.
There's data that shows it's you know, you turn on
the TV. The first thing you hit is let me
go see what's on Netflix. And remember the highest price
(11:13):
offering the highest priced subscription, Yeah, costs sixty eight percent
more than their lowest price, so you can just like
kind of go, you want to save some money, you
just downgrade the subscription. You don't need to cancel it.
Speaker 2 (11:26):
So I think for them to get to the.
Speaker 5 (11:27):
Point where people are canceling like it, it's nearly impossible.
Speaker 4 (11:31):
You can't put food on the I'm all getting Hopefully
nobody has to do that.
Speaker 3 (11:36):
Just sorry, the squid game on the table exactly.
Speaker 2 (11:41):
Mark.
Speaker 3 (11:42):
When it comes to the landscape out there, Yeah, okay,
I know first mover advantage is going to be part
of your answer here. But Netflix stands apart from the
competitors out there, and part of it is that some
of them were legacy media companies that were trying to
adapt to this new world that Netflix helped pioneer. But
why is Netflix so good at this and everybody else
(12:03):
is struggling?
Speaker 5 (12:03):
Well, my friends at Disney would properly this.
Speaker 3 (12:07):
I mean you know they would. They disagree that Netflix
does it better? Well, I think Netflix, do you think
they would? It's the thing is they might say we
have blue and Netflix doesn't.
Speaker 2 (12:14):
But that's it.
Speaker 5 (12:15):
Yeah, what what well they have? They have a lot
more sports. But I agree with what you're saying, which
is when you turn on the TV, Netflix is generally
the first thing you're going to check. And and that's
just an insane advantage because it allows you to turn
shows that maybe people wouldn't have watched, like WWE, and
(12:36):
turn them in the top ten hits on Netflix just
because you know, you you sit down on the couch,
turn on the TV. WWE is on and it's live,
why you know what, and it's there for you to watch.
It gives us this incredible power to turn average content
into really big hits, and to turn great content into
like like NFL sport NFL games in the nearly Super
(12:59):
Bowl on a regular weekend.
Speaker 2 (13:01):
You're more of a UFC person.
Speaker 4 (13:03):
Yeah, totally not. Advertisers, where do they want to put
their ads in terms of content? Is it the live
sports stuff?
Speaker 5 (13:10):
Is it?
Speaker 4 (13:10):
What is it? Do they care?
Speaker 2 (13:11):
Are they picky?
Speaker 5 (13:13):
It depends on the advertiser, but generally people lives. You
can sell live sports all day long.
Speaker 2 (13:19):
From now.
Speaker 5 (13:20):
We're kind of not in that game. We're not dealing
with brand advertisers. But I know when I talk to
all the big agencies and things like that, they it's
all about live sports. They just it's an insatiable appetite streaming.
Speaker 4 (13:33):
They don't care.
Speaker 5 (13:34):
Yeah, streaming live sports. ESPN is now rolling out streaming
live sports and people are I know from Disney, people
are just lining up to buy it. And it's every
streamer is in the process of doing that, and so
it's always that. After that, I think the appetite changes
a lot, but there's just something about the engagement live
(13:56):
sports that advertisers love.
Speaker 2 (13:58):
Yeah.
Speaker 3 (13:58):
The November twenty twenty four Taylor Serrano fight on Netflix
became the most watched professional women's sports event in history.
They say that we're well with the upcoming rematch. Were
poised for another groundbreaking night that will further elevate the
profile of women athletes. In addition, Netflix is opted into
a second game for Christmas twenty twenty five, where they'll
be the home of the NFL for Christmas Day. My
(14:20):
sister was watching that last year on Christmas Day. They
say live efforts have primarily focused on the US. We
expect to extend this strategy to other countries over time.
How big of an opportunity is that for Netflix given
what you told me about the ad demand for live sports,
huge for Netflix if they expand this outside the US.
Speaker 1 (14:36):
Yeah.
Speaker 5 (14:37):
I mean if I was a sportslee, if I was
Formula one, I would literally just live in front of
Surrended's house, just like, let's do a deal.
Speaker 2 (14:46):
Why do you think that you haven't done well?
Speaker 5 (14:47):
They already are doing that because Half One's become so
popular with the foot drive a match. If the gate
if they just last year, was like.
Speaker 3 (14:57):
So why is it not there now? Do you think
is it a long term deals that are in place already?
Speaker 2 (15:02):
Yeah?
Speaker 5 (15:02):
I think it's long term deals. I wouldn't be surprised
if Formula one comes there they go to Europe. Of course,
football in Europe, I mean the the it's just something there.
Speaker 2 (15:12):
But Netflix is smart.
Speaker 5 (15:13):
They're going to sports that are like like you know,
female boxing, that wouldn't necessarily be something that would attract
the huge audience and get the highest rates, and they're
turning it into the most watched female sports event in history.
And this is the superpower that they have. It's the
advantage that they just have over every other streaming network
(15:35):
by being the first thing you click when you turn
on your TV.
Speaker 4 (15:38):
I just want to mention we are talking with Mark Douglass,
President and CEO of Mountain Shares of Netflix. They're up
about four point six percent. This is the company logs
record profit in the quarter, revenue tracking above the midpoint
of its twenty twenty five forecast range, and it does
see second quarter revenue. So the current quarter that we're
in eleven point zero four billion, the estimate is ten
(15:59):
point eighty eight bill. And when it comes to advertisers,
does everybody else want to just be Netflix? Especially when
it comes to streaming? What do you hear from advertisers?
Is there first choice always Netflix?
Speaker 5 (16:11):
Not for I think people are very intrigued by advertising
on Netflix, but at the end of the day, they
want the consumer wherever they are. And so Netflix started
their ads here with very very high pricing and they've
had to kind of come back down the reality and
read tools. So I don't think advertisers like Netflix are nothing.
(16:31):
But Netflix has the most viewers, so they potentially have
the most ad space over time.
Speaker 4 (16:36):
One last quick question. We know you're going to join
our TV colleagues in just a moment, but a federal
judge rule that Google illegally monopolized online ad technology markets
for advertising exchanges and tools used by websites to sell
ad space. So they say they, you know, we're doing
anti competitive acts to acquire maintainment opoly power in these markets.
(16:57):
So what does that possibly mean at this stamp don't.
Speaker 5 (17:01):
I don't think Google is losing any sleep really that ruling.
If anything, it's their dream scenario. It's the small it's
a small part of their business. But the you know,
US federal government has been very focused on it from
an anti trust and in fact they're probably you know,
it's like, yeah, focus it's focused on that, don't focus
on search and AI, and so to me, it's it's
(17:23):
almost a dream scenario. For the best dream is that
they're left alone. But if they have to, you know,
kind of kind of focus on that and even potentially
give up that great scenario for them. I don't think
any investor should be worried about Google losing that part
of their at business.
Speaker 4 (17:40):
All right, kind of interesting different perspective, and we will
say that Alphabet Chaos were down about one point four
percent today, a little bit of a swing. Mark, Thank
you so much, Mark Douglass. He's president CEO Mountain, the
company of software that helps companies target advertising a smart TV.
So good to get his perspective.
Speaker 3 (17:55):
Mark, thank you
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