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Netflix Q3 2022 Review: Ad Tier, Subscriber Numbers and Kids Headlines

Out with the ‘Shrinking Quarters’ and in with the Ad Tier.

Picture: Adobe Stock

Welcome to a recap on the Netflix Q3 2022 outcomes with an emphasis on the children content material technique for the streamer sooner or later. 

Please notice: this text was first published on the Kids Streamersphere on LinkedIn.

Netflix Q3 earnings hit on October 18th, and OMG can you’re feeling the aid from Reed?

“Well, thank God, we’re done with shrinking quarters.”

It’s been a tough time, Reed, u okay?

netflix hq sunset bronson studios

Picture: Getty Images

Aside from subscriber numbers being UP(!), modestly, from a quantity viewpoint, it has been a busy fortnight of headlines for the streamer. Earnings gave the chance for extra readability on these, together with:

A softening on theatrical exclusivity… Glass Onion: A Knives Out Mystery will get the broadest cinema launch ever seen by a Netflix film. Definitely not full scale, however 600 screens within the US over Thanksgiving weekend, with extra within the UK, Italy, Germany and past, is effectively above the restricted releases we’ve seen earlier than. Having stated that, the quick 7-day window and lack of promoting spend factors to this being a advertising, reasonably than a income, train.

The firm principally confirmed this on the earnings name, saying it seems at big-screen publicity as “just another way to… build buzz and reputation for the film ahead of its Netflix release.” Here’s hoping it pays off in viewing numbers when the movie hits the platform on December twenty third (I’m not in any actual doubt it’s going to).

Confirmed launch of their advert tier… Rolling out from early November in lots of main international locations’ markets together with the US, the UK, FIGS, plus others in LATAM and APAC. Crucially for youths, the streamer has confirmed that the advert tier “will not display ads in kids’ profiles, or in any content aimed at viewers ages 13 and under, even when it’s accessed from an adult’s profile.”

The earnings name had extra on how Netflix assume the advert tier will land. It’s not one thing they anticipate cannibalizing present full fats subscribers. Important factors to notice on the ad-supported tier is that it’s solely out there in 720p and doesn’t assist non permanent content material obtain. There are loads of people who wouldn’t put up with that. Two teams which may, although, are additionally prime password sharers: 1) grandparents, who could also be extra used to SD high quality, and 2) nest-exiting younger people who find themselves cash-strapped and extra prone to be watching on smaller display screen cell units. Netflix have been constructing a content material providing for the latter for years, with the likes of Fate: The Winx Saga, Stranger ThingsEnola Holmes, and many others. More not too long ago they’ve been courting the previous, with sequence like The Crown and the aforementioned Knives Out film sequence. Moving to an ad-supported plan isn’t the one possibility right here, although, as the corporate rolls out varied methods it could monetize account sharing.

Lots to say within the UK… Netflix be part of UK TV rankings company BARB (with information changing into out there simply forward of The Crown S5 launch—tidy!). There was additionally disclosure of a load of economic information, together with UK subscriber numbers that sit at 13.8 million or round 49% family penetration.

In addition to those headlines… Another key change in Q3 earnings is that the corporate will not present subscriber steering to buyers. In latest years Wall Street has been keen on utilizing this specific stick with beat Netflix with on share worth. Revenue and working earnings will now be checked out as the first top-line metrics. The earnings letter pulled no punches on how rivals stacked up on this regard:

“Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard—we estimate they are all losing money, with combined 2022 operating losses well over $10 billion”

For me, the change on subs steering matched the pivot on content material efficiency metrics from final 12 months, the place Netflix stopped reporting variety of households who considered (attain) and moved to hours considered (engagement). As sub acquisition plateaued, it was going to get trickier and trickier to beat that unimaginable file set by Squid Game. Better change the yardstick to hours considered, which they’ll have the ability to comfortably beat their rivals on for the foreseeable, notably with the binge drop mannequin. Conveniently, they’ll beat rivals on working revenue too, the place their new steering is concentrated.

Netflix Kids Headlines

Information and references associated to children content material weren’t in abundance this quarter. The Sea Beast obtained a shout-out because the “biggest animated original film to date” with 165 million hours considered; nonetheless, this was tempered by the admission that animated movies had been at an “earlier stage.” This is a change of tune, given the streamer has been outputting excessive finish authentic animated movies since Klaus in 2019, adopted by The Willoughbys and Over the Moon in 2020. At that stage Netflix’s place was that they had been fired up about catching Disney in household animation. It seems like that hubris has gotten a kick within the tooth since.

Netflix Kids Content Performance

So what children content material has been popping on Netflix this quarter? On films, along with The Sea Beast, Netflix talked concerning the significance of pay 1 home windows because the “next best” factor to Originals. As highlighted in a previous instalment of this newsletter, the pay 1 window of Sing 2 hit Netflix Global Hours Viewed Top 10 regardless of solely being out there in two markets, the US and South Korea. Its US-specific efficiency per Nielsen Streaming Content Ratings is tremendous spectacular. I’m planning a deep dive on that in upcoming weeks.

For children content material, although, we have now to say that the worth of third-party licensing goes past pay 1. Older prequels for latest Illumination theatrical releases additionally did wonderful work. Indeed, Minions & More 1, a 48-minute compilation of shorts relationship from the final decade, hit the Netflix Global Hours Viewed Top 10 for 3 weeks.

For sequence, the one one to peek via was DreamWorks’ Kung Fu Panda: The Dragon Knight. This really hit tougher than the rebooted Boss Baby once we look throughout Weeks 1 and 2, regardless of crashing out for Week 3. No pleasure for The Cuphead Show! S2, regardless of the nice visibility of S1, nor for the newest preschool sequence from exec producer Chris Nee, Spirit Rangers.

Animated Series Kung Fu Panda

What Next?

Ted Sarandos completed the decision with an enormous roster shout-out to a ship load of high-profile titles coming to the service in This fall. But what concerning the children/household content material, Ted? Why do you allow me to do EVERYTHING?!

On the animated entrance, there should not one, not two, however three films price monitoring. Wendell & Wild from the creator of Coraline hits on the finish of the month, adopted by My Father’s Dragon from Cartoon Saloon in November.  We spherical out with Guillermo del Toro’s Pinocchio coming in December. Perhaps authentic animated films aren’t at such an early stage in any case.  In addition to those we are able to count on a juicy pay 1 window for The Bad Guys spicing issues up within the US.

With dwell motion we’re in for a deal with. The School for Good and Evil dropped this week. Upcoming we have now Slumberland starring Jason Momoa, Enola Holmes 2 starring Millie Bobby Brown, and Matilda the Musicalstarring Emma Thompson.

So films are lined, however what about sequence? Is it simply me, or have these been a bit missing of late? I imply, we do have the Teletubbies sequence reboot hitting in mid-November which is displaying some sturdy indicators of curiosity. Check out the view counter on our What’s on Netflix tweet about it; final time I checked it was at 10.2 million!:

Another fascinating sequence that popped simply this week was Oddballs. This was produced by Atomic Cartoons (Hilda, Dogs in Space, plus some Lego/DreamWorks commissions) and relies on a super successful YouTube channel. Let’s see the way it progresses.

But what different children reveals are you actually enthusiastic about coming to Netflix quickly? Please, encourage me! Perhaps I’m annoyed that efficiency indicators on streaming titles are like gold nuggets until your identify is CoComelon or Bluey.

Oh effectively, I assume we’ll want to stay to film efficiency for now, and there will likely be loads of that in upcoming weeks.

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