Latest news with #SpencerNeumann
CNA
28-04-2025
- Business
- CNA
Commentary: Why do we put up with Netflix's endless price hikes?
SINGAPORE: When Bengawan Solo raised the price of my favourite pandan cheese roll from S$1.70 (US$1.30) to S$2.70 per slice a few years ago, I declared to my family that I was boycotting the confectionery: 'I don't need these empty calories!' When Netflix increased its premium tier pricing from S$25.98 to S$29.98 last week, I felt annoyed, then quickly consoled myself: 'It's just S$4 – less than what a bowl of noodles costs.' Never mind that Netflix content can be considered 'empty calories' too. Or that the company had just raised its prices last year, in February 2024. Over the past decade, my monthly Netflix bill has gone up 77 per cent. When the streaming service first launched here in 2016, I paid S$16.98 for the premium tier. A basic subscription ran S$10.98 in 2016 and is now S$15.98, a 46 per cent increase. Netflix's pricing behaviour is at odds with a world where people are cutting expenses in the face of tariffs and large-scale employment disruptions induced by artificial intelligence. Yet, the company appears confident that millions will swallow the latest price hike like I did. Maybe they're right. After all, a Singapore Management University study in 2024 revealed that about 38 per cent of respondents now consider streaming services to be a 'basic essential so that a person can lead a normal life in Singapore'. All the same, how much longer can Netflix keep raising prices without losing customers? CONTENT IS KING A combination of shrewd planning, massive spending, competitor missteps and lifestyle changes has made Netflix wildly successful and – more importantly – the clear winner of the streaming wars. From October to December 2024, despite a wave of complaints about its rising prices and crackdowns on account sharing, Netflix added a record 18.9 million global subscribers. Its subscriber base numbers over 300 million today, far outstripping Amazon Prime (about 200 million), Disney (125 million), Max (117 million) and Apple TV (25 million). Netflix keeps viewers captive by serving up a non-stop flow of varied, high-quality content. In 2025, the company plans to spend US$18 billion on content, up from US$16 billion in 2024. In the next few months, subscribers will get to watch the final seasons of hit shows Stranger Things, Squid Game and the second season of Addams Family spinoff Wednesday. I'm not a fan of these, but I just binge-watched the new season of Black Mirror, and am eagerly awaiting the return of Love, Death And Robots. Thanks to the massive amount of viewership data feeding its algorithms, Netflix has become a pro at pandering to a wide range of tastes. Even viewers hankering for local fare have more than just Emerald Hill to satisfy them in its growing Southeast Asian catalogue. Netflix chief financial officer Spencer Neumann in March said that 'we're not anywhere near a ceiling' in terms of content spend. The streamer is in about 40 per cent of connected TV households but has only captured 6 per cent of the addressable market, he shared. This explains why, starting this year, subscribers are seeing John Cena and other World Wrestling Entertainment stars appearing on Netflix in a US$5 billion deal. I haven't watched Wrestlemania in over 30 years – but since I've technically already paid for it, why not? WHAT IS VALUE? Meanwhile, Netflix's competitors are struggling to justify their value to consumers. In late 2024, Disney+ increased its subscription prices and lost over 700,000 global subscribers in the same quarter – myself included. In Singapore, the cost of its standard monthly subscription went up from S$12.98 to S$15.98, and the premium tier went from S$15.98 to S$18.98. Why did I cancel my subscription? Compared to Netflix, Disney+ seemed to offer little new content, flogging the tired Star Wars and Marvel catalogue on repeat. I now subscribe to Disney+ on an ad-hoc basis to binge-watch select series such as Daredevil: Born Again, or whenever I get a good offer. For example, I recently recontracted my Singtel mobile line, a deal that came with six free months of Disney+. HBO used to be the king of cable TV with blockbuster hits like Game of Thrones and Westworld, but its rocky rebranding as Max has confused viewers. Perhaps current hits The White Lotus and The Last of Us can convince some to pay S$14.48 a month – but that's not a lot of options to bank on. I keep paying for Amazon Prime Video simply because it's a no-brainer at S$4.99 a month. Its catalogue may be spotty in quality, ranging from stellar offerings like The Expanse, to a weak prequel series to The Lord of The Rings and forgotten 1980s B-movies – but the non-streaming perks make up for it, including free shipping on Amazon Prime Singapore and free PC games each month. But this is something Netflix is also making moves on: Just download the Netflix mobile app and you can install games featuring famous IP such as Street Fighter, Sonic the Hedgehog, Grand Theft Auto and Squid Game. CINEMAS CANNOT FIGHT BACK Also helping Netflix to win the long game is the stubborn refusal of cinema operators to change with the times. I used to love the cinema – I brought my family to watch every Marvel superhero movie until Avengers: Endgame in 2019. But while ticket prices kept going up (now costing about S$15 for a weekend ticket), the actual experience only seemed to be getting worse. For instance, the last few movies I watched at Golden Village Bishan were marred by blurry projection, poor colour definition or deafeningly loud audio. (Recent Google reviews reflect similar experiences from other patrons.) When the same movies were released on streaming, I watched them again at home and found each time to be a much better viewing experience, thanks to the excellent colour reproduction of my 4K OLED television – a feature shared by most TVs sold today. I could also adjust the volume as needed. Even if the movie isn't available on Netflix, it's much better value to me to rent the 4K versions for about S$5 off the Apple TV Store. I don't have to sit through up to 20 minutes of inane ads; nor do I have to endure stuffy or freezing temperatures. (And I can press pause when I need to run to the bathroom!) A good cinema can still offer an immersive viewing experience, but nowadays, the home experience isn't that shabby. Thus, I'm not surprised that cinema attendance has yet to return to pre-COVID levels; nor did I shed a tear when mm2 shuttered more Cathay cinemas. CAN NETFLIX BE STOPPED? As long as consumers continue to demonstrate a willingness to spend on digital entertainment even during periods of economic uncertainty, Netflix – and its price hikes – seems likely to remain unstoppable for now. In truth, the company's biggest competitor is not Disney+ or Amazon, but YouTube, which is just slightly behind Netflix in audience size (270 million paying subscribers versus Netflix's 300 million) and boasts similar revenue (about US$10 billion in the last quarter of 2024). YouTube's advantage is that it's driven by user-generated content; it doesn't need to invest in original content production like Netflix. I already watch YouTube more than Netflix, tolerating the annoying ads to avoid paying the S$13.98 subscription fee. More lightweight fare on TikTok and Instagram appeals to shorter attention spans. For gamers, there's no shortage of cheap mobile games and affordable PC gaming subscription services like Microsoft's Game Pass (S$11.99 a month) to satisfy one's entertainment needs. So should Netflix breach the S$30 barrier for its premium tier, I do have alternatives ready. Unfortunately, even with all these much cheaper options, Netflix's grip on me may still remain iron-clad – simply for the fact that before I can cancel my subscription, I'll first need to survive negotiations with my wife and children. Fine. You win, Netflix. Again.
Yahoo
15-04-2025
- Business
- Yahoo
Netflix Projects $10.4B in Q1 Revenue as Ad Tier Drives Growth
Netflix (NASDAQ:NFLX) is set to report Q1 2025 earnings on April 17, and the company's aiming to keep its streak going. It's guiding for $10.4 billion in revenue up 11.2% from the $9.35 billion it posted in the same quarter last year. On the profit side, it's projecting earnings of $5.58 per share, just shy of the $5.73 analysts are expecting. Operating margins are forecast at 28.2%, slightly down from the 29% it targeted for the full year, but still strong. One big tailwind? The ad-supported plan. Netflix says nearly 50% of new sign-ups are choosing the cheaper, ad-backed option, which has helped drive user growth even as the company stopped reporting quarterly subscriber adds. Still, it confirmed it has surpassed 300 million global users a 16% increase from last year. On the content side, Netflix is going big. It plans to spend $18 billion on programming in 2025 up from $17 billion in prior years with CFO Spencer Neumann saying that figure isn't a cap. It's also forecasting $8 billion in free cash flow for the year, a key number investors are watching closely. The Q1 lineup features returning hits like Black Mirror (Season 7) and You (Season 5), alongside new originals like Pulse and the Tom Hardy-led Havoc. Options markets are pricing in about a 9% stock move either way after the report a sign that while Netflix looks strong, expectations are already baked in. This article first appeared on GuruFocus. Sign in to access your portfolio
Broadcast Pro
13-03-2025
- Business
- Broadcast Pro
Netflix plans $18bn content investment for 2025
The $18bn cash content spending would be an 11% increase from last year's $16.2bn. Netflix is set to invest approximately $18bn in content production in 2025, marking an 11% increase from its $16.2bn budget in 2024. Chief Financial Officer Spencer Neumann announced the expanded spending, emphasising that the company is far from reaching a ceiling on its content investment. 'We're not anywhere near a ceiling. I think we are still just getting started,' he stated. The budget increase will fund a diverse lineup of high-profile projects, including The Electric State, a sci-fi film directed by the Russo Brothers and starring Millie Bobby Brown and Chris Pratt. The Russo Brothers, known for their successful collaboration with Netflix on The Gray Man, continue their partnership with this upcoming production. Additionally, Netflix is allocating substantial resources to its 'Extraction' franchise, Zack Snyder's Rebel Moon and Army of the Dead, as well as hit series like Wednesday and Bridgerton. The platform is also strengthening its offerings in documentaries, K-dramas, and anime to cater to its global audience. Netflix's strategic growth extends beyond content production. Following a period of strong revenue acceleration in 2024, with nearly 20% revenue growth and a six-percentage-point margin expansion, the company continues to focus on enhancing entertainment value while expanding revenue streams. Key initiatives include tackling account sharing and expanding its advertising business. Netflix's paid sharing model is now fully operational, and the advertising tier has seen significant adoption, with about 55% of new subscribers opting for the ad-supported plan in Q4 2024. Looking ahead, Netflix expects to double its advertising revenue in 2025, following a similar achievement in 2024. To support this growth, the company is launching a first-party advertising technology stack, set to roll out broadly starting in the US in April. This move aims to capture a share of the estimated $180bn addressable advertising market across Netflix's operating regions. As Netflix continues to scale, the company is also exploring new content formats, including live events and gaming. A major highlight of this strategy is its growing interest in live sports. Netflix made its debut in sports broadcasting by streaming two NFL games on Christmas Day 2024, drawing nearly 65m viewers. Encouraged by this success, the company is considering bidding for additional NFL broadcasting rights, including Sunday afternoon games, potentially challenging networks like CBS and Fox. However, major shifts in NFL broadcasting rights are unlikely before 2029, as current deals extend through 2033 with an opt-out option in 2029. 'Never say never,' Neumann said regarding future sports acquisitions. 'If there's a way to make economic and business sense for a broader package of sports, we remain open to it. But it's not something that's in our near-term horizon.' Despite mixed reactions from fans about streaming-based NFL broadcasts, Netflix's venture into live sports aligns with its broader strategy of diversifying content and engaging a wider subscriber base.
Yahoo
08-03-2025
- Business
- Yahoo
Netflix CFO: "We Are Still Just Getting Started"
At Morgan Stanley's Technology, Media & Telecom Conference on March 5, 2025, Netflix (NASDAQ: NFLX) Chief Financial Officer Spencer Neumann provided insights into the streaming giant's growth strategy and prospects. Following a period of reacceleration with nearly 20% revenue growth and 6 percentage points of margin expansion in 2024, the company continues to focus on improving its entertainment value while developing new revenue streams. Netflix is demonstrating remarkable growth despite reaching significant scale, with momentum coming from several strategic initiatives, including paid sharing and advertising. We're pleased with the progress. We did reaccelerate revenue growth, as we just talked about. We talked about on the last earnings call, our outlook for '25... And then we believe it's healthy and a long runway beyond that. This reacceleration comes after implementing two major tactical moves: addressing account sharing and building an advertising business. The company has successfully operationalized its paid sharing solution while growing its advertising tier, with approximately 55% of new sign-ups choosing the ad-supported option in the fourth quarter of 2024. Netflix is leveraging multiple growth levers including member growth, pricing optimization, and advertising to drive long-term revenue and profit expansion. We want to have 3 formidable ways in which we're growing into our revenue and profit pool between member growth, pricing plan evolution, and advertising. I think when you talk about 5 years, I think you should expect that we will be, for the foreseeable future, maybe forever, a primarily subscription business. But if ads can be a meaningful minority of our revenue, that's still a very important contributor to us. The company expects to double its advertising revenue in 2025 after doubling it in 2024. While still a small portion of overall revenue, Netflix is building foundational capabilities including a first-party ad tech stack launching broadly in 2025, starting with the U.S. in April. This advertising business taps into an estimated $180 billion addressable market in the countries where Netflix operates. Despite its impressive scale with over 300 million paying members, Netflix believes it has substantial room for growth across multiple dimensions. Even though we're pretty big today at over 300 million paying members around the world, an audience, when you multiply that by the number of people viewing in any given household, we're entertaining an audience of over 700 million around the world. So it's pretty big scale, but we're still small on kind of every key measure for us in terms of addressable market. So we're in about 40% roughly of the connected-TV households around the world. ... We're capturing about 6% of our addressable revenue market, and we're less than 10% TV view share, again, in every major country in which we operate. This substantial runway for growth includes expansion opportunities across household penetration, revenue per customer, and increasing viewership share. The company's strategic investments in content, including non-English language programming produced in over 50 countries, help drive this growth while differentiating Netflix from competitors. Netflix management expressed confidence in the company's growth trajectory, with Neumann reiterating the belief that the business is "still just getting started" despite its significant scale. With key competitive advantages -- including a global content production studio creating entertainment in over 50 countries and improving monetization capabilities -- Netflix appears well positioned for continued expansion. The company is particularly focused on scaling its advertising business, enhancing its live event offerings (not regular sports seasons, but "eventized" moments like the NFL on Christmas Day), expanding gaming capabilities, and leveraging artificial intelligence across the business. As Neumann emphasized, "The worst thing that can happen is if we don't innovate fast enough." Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $286,710!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $44,617!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $488,792!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 3, 2025 David Kretzmann has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy. Netflix CFO: "We Are Still Just Getting Started" was originally published by The Motley Fool Sign in to access your portfolio
