Wednesday, October 19, 2022

Netflix Q3


  • "After a challenging first half, we believe we’re on a path to reaccelerate growth. The key is pleasing members."
  • "We think our bingeable release model helps drive substantial engagement, especially for newer titles."
  • "Our existing plans remain ad free."
  • To stop providing subs forecasts from 23Q1
  • Strong USD impact 2022E $1b on rev, $0.8b on oper income; oper margin target (19-20%) on track but lower if USD remains above Jan 2022 level
  • Targets FCF: 2022 $1b (+/-  few 100m), 2023 substantial growth
  • Growth rates excluding currency effects:
    • 22Q3
      • Total streamers (223m) +4.5% (lowest ever)
      • ARM ($11.85) +8%
      • Revenues ($7.93b) +13%
    • 22Q4E
      • Total streamers (228m) +2.6%
      • ARM +6%
      • Revenues ($7.78b) +9%
  • Margins
    • Gross margin (after content amortisation) 39.6% (down from a peak 21H1).
    • Marketing expense 7.2% of revenues (roughly at a low)
    • Technology & Development roughly flat at ~8.5% of revenues
    • Operating margin 19.3%
  • Cash flow
    • Cash spent on streaming content $4.52b in Q3, $17.8b TTM (stable for 4 quarters)
    • Cash spending-to-amortisation ratio 1.24x (peaked at 1,75x in 19Q4)
    • Cash spent per net add $1,884 (peak)
    • Cash spent per retained sub $20.4 (longer term roughly flat)
    • Cash & equivalents $6.11b. Last debt issue 20Q2, then bottomed at $5.82b in 22Q2.
  • "We now have 35 games on service (all included in every Netflix subscription without in-game ads or in-app purchases) and we’re seeing some encouraging signs of gameplay leading to higher retention." + 55 games in development
  • Animal Logic acquisition [see 220719] to impact 22Q4 cashflow
  • Plans new game studio in S California
  • Considers cloud gaming service
Password sharing
  • To start charging sharers extra for borrowers from early 2023.
  • Borrowers may create own subscription, perhaps the Basic With Ads tier.
  • Borrowers can migrate their profiles using Profile Transfer.
Main points
  • Back to subscriber growth.
  • Heavy USD impact.
  • Focus on customer: content (originals) & binge viewing.
  • Games becoming more important.
  • Password sharing attacked with charging plan, cheaper tier and Profile Transfer.
  • Margins could be expanded, as scale builds, but games delay the process.
  • Content spending stabilising in absolute terms.

Monday, October 17, 2022

Vodafone selects Altice for open access fiber joint venture

Vodafone selects Altice for open access fiber joint venture (instead of KKR, Brookfield or Deutsche Glasfaser/EQT).

  • Vodafone DE to establish 50/50 JV FibreCo 23H1 with Altice
  • To develop 7m FTTH lines (o/w 80% to housing ass in existing HFC footprint, 20% to neighbouring homes outside current footprint) in 6 yr
  • Total investment EUR 7b o/w 70% debt financed
  • Currently offering 1 Gb/s to >24m homes (incl wholesale on Telekom, ...); to complement node splitiing, Docsis 3.1 (high splitting, max 3 Gb/s), Docsis 4.0
  • Open for wholesale (Vodafone DE anchor tenant without minimum revenue or volume commitment)
  • Construction & maintenance by Geodesia (= Altice)
  • Vodafone DE to receive max EUR 1.2b cash (o/w 120m upfront at closing JV, 487m deferred during roll-out, earn-out max 595m)
Current JV's in Germany:

Friday, October 14, 2022

Netflix's tier #4 coming November 1, 2022: Basic With Ads - Updated

To launch AVOD tier Basic With Ads in 12 countries from November 1, 2022:

  • 221101 in Canada (6 CAD/mo), Mexico
  • 221103 in US (7 $/mo), UK (5 GBP/mo), Australia (7 AUD/mo), Brazil, Japan, S Korea, DE (5 EUR/mo), FR (6 EUR/mo), IT (5.5 EUR/mo)
  • 221110 in ES (5.5 EUR/mo)
  • To provide outlook at 22Q3 (221018), questions:
    • Growth (take-up) prospects
    • Customer satisfaction
    • ARPU impact
    • Cannibalisation. How many will sign-up as new customers vs. current customers downgrading.
    • CPM (current and future, assuming stronger targeting)
    • Will there also be, in time, a 'Standard With Ads' and a 'Premium With Ads' tier?
  • "We're confident that ... we now have a price and plan for every fan."


  • 1 simultaneous device
  • HD/720p
  • No downloads
  • Excludes 5-10% of titles as result of rights restrictions (to be reduced over time)


  • Pre & post roll ads, new movies pre-rolls only
  • 15-30 sec (20 sec in ES)
  • Ad load 4-5 min/hr
  • Targeting at first based on Top 10 by region & genre, later possibly on age, gender, viewing behavior, time of day.
  • Ads sales based on fixed price not auction.
  • Nielsen’s Digital Ad Ratings (DAR) service to start measuring 2023, eventually through Nielsen ONE Ads.
  • DoubleVerify and Integral Ad Science (IAS) to verify viewability & traffic validity of ads from 23Q1.

Comparison to current tiers:

  • To upgrade Basic plan to HD (720p).
  • Current US tiers Basic, Standard, Premium 10, 15.5, 20 $/mo
  • Current US DVD-by-Mail: 10, 15, 20 $/mo for 1, 2, 3 discs concurrently

Monday, October 10, 2022

Why FWA is serious business in Denmark, but not in The Netherlands - Updated

  • DK and NL have high levels of fiber.
  • The 3.5 GHz band was auctioned in DK in 2021, NL will follow 2023.
  • 3 Denmark (Hi3G DK) embarked on heavy investment in network desnification (see graph). They are now marketing FWA-over-5G as an alternative to fiber.
  • MNOs in NL will refrain from this kind of investment: 1. VodafoneZiggo and T-Mobile NL are heavily leveraged, they need to pay large annual dividends and they will stay away from any serious market disruption, 2. In the mobile oligopoly, KPN also pays out large dividends and will not feel challenged.

Delta Fiber projects

Delta Fiber FTTH projects (red flags) avoid the former Reggefiber footrpint (east).

Wednesday, October 05, 2022

GSMA report The Mobile Economy Europe 2022

GSMA report The Mobile Economy Europe 2022