The Entertainment Strategy Guide to 1-February-2021
Netflix’s Year in Review, Two Long Reads from The Economist, Can Peacock Win and More…
Welcome to the Entertainment Strategy Guy Newsletter! My favorite reads, listens, socials and more to keep you informed on the business of entertainment, with the links to my recent writing.
If we thought 2021 would slow down from 2020’s news pace, we were wrong. Even entertainment had its fair share of big stories moving the needle, from Netflix making money to Peacock getting into the World Wresting Entertainment business. February likely holds more of the same; the streaming wars are just getting started.
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The Best of the Entertainment Strategy Guy
“Netflix’s 2020 Year in Review: Biggest Hits & Business Insights” at Whats-On-Netflix
If I had gone into a coma in February of 2020, and woken up to find out that Netflix had grown to 200 million subscribers AND had made $1.8 billion in cash, I would have been shocked. (Though finding out about a global pandemic would be even more shocking.) To put that crazy situation into context, I reviewed each quarter of Netflix’s last year, looking at their biggest content releases, competitors, executive moves and how Covid-19 influenced it all.
“Netflix’s Step One Was to Break Even, The Next Step is to Generate Massive Cash Flow - Most Important Story of the Week” at my website.
Speaking of Netflix’s big year, arguably the biggest event was that, primarily due to Covid-19, Netflix made money in free cash flow terms for the first time since 2011. This is a big deal because, short of the pandemic, Netflix was still one to two years away from this milestone. This alone was enough for many analysts to declare the streaming wars won. But it’s a bit more nuanced than that: to truly justify their current valuation, Netflix needs to go from “breakeven” to “massive cash flow generation”. That’s slightly tougher. Read about that plus my theories on what drove the positive cash flow in this long read.
At the same time that Netflix is increasing prices, while not losing subscribers in the United States, many of its competitors are lowering prices or offering streaming for free. Specifically, HBO Max and Apple TV+. I look at this issue plus the latest round of theatrical delays, Disney’s lead in Indonesia, the CW’s new licensee and more.
“Can Peacock’s “Live TV” Strategy Win the Streaming Wars? Yes – Most Important Story of the Week” at my website.
Peacock and their parent company (Comcast’s NBC Universal) dropped two big stories last week. First, they announced a partnership taking over the WWE streaming service. Second, they announced that they would shut down NBCSN by the end of the year. Of the traditional streamers, Peacock clearly has the most differentiated strategy. I explain this plus “the TV habit”, “unique viewing days”, the “distribution of fandom” and more in explaining why I like Peacock’s strategy.
“Oh, Fine GameStop and Other Contenders for Most Important Story of Last Week” at my website.
Since everyone everywhere is dissecting GameStop, I finally did too. Read about its minor implications for entertainment plus AT&T subscriber growth, HBO Max’s franchise strategy, Netflix vs Google Chromecast and more in this bonus article of thoughts that couldn’t fit into my weekly column.
Other Shout Outs
The EntStrategyGuy is getting cited in a few more places across the interwebs. The latest come from Sonny Bunch at the Bulwark, Brandon Katz at Observer and Andrew Rosen at his Monday Parqor. (Also all good reads in their own rights.)
The Best Content of the Last Two Weeks
These are the best reads, listens, newsletters, or social conversations I came across last week.
Long Read of the Week - The Economist Holiday Double Issue and World in 2021
One of my holiday traditions is to buy two Economist magazines each year, even if I’m not currently subscribed. The first is the last issue of the year, “The Holiday Double Issue”. It really lets the Economist authors reach outside their comfort zones. (I wish they told us who wrote what.) My favorites this year were articles on French villages, girlhood, Pleistocene Park and the Tundra, and how families worked from home before factories. The two articles with entertainment ramifications were the description of the biggest hobby in South Korea, hiking, and the monetization of the Shaolin Temple in China.
The second recommendation is the Economist “The World in 2021” special issue. It helps broaden your horizon from US-only (if you’re an American) or your country/region if you live anywhere else. While overall you can tell this issue was written mostly before the Pfizer/Moderna vaccines were approved, it still helps set the stage for 2021.
Other Long Read - “Netflix and Dreamworks TV Output Deal Reviewed 7 Years Later” And “Managing the Tweenvolution” by Emily Horgan at Whats-On-Netflix
Twitter friend Emily Horgan has been digging deep into the kid’s battlefield of the streaming war and I’m down for all of it. Horgan goes into great detail of each of the different segments of kids programming, a level of nuance I don’t usually see in the coverage. In particular, I liked the article on tweens (and how Netflix is poaching Disney alum/talent) and the strategic review of the Dreamworks deal.
(Honorable Mention: Kids were also the subject of a major article in Variety as well, so pair these two for a good dive into the battle for children, an area I’d love to explore further.)
Non-Entertainment Read - “The GameStop Fiasco Proves We’re in a ‘Meme Stock’ Bubble” by James Surowiecki
Everyone last week was writing about GameStop last week, though few were truly qualified to do so. But James Surowiecki definitely is, and I didn’t realize he had started writing for Medium. (I loved his Financial Page in The New Yorker.) Overall, this is a great read explaining what happened.
(Honorable Mention goes to two of the “Matts”, specifically Matt Stoller—who ties this reasonably to antitrust removing good opportunities for investment—and Matt Levine—who was prolific last week.)
Listen of the Week - “Gamblers” Podcast from The Ringer
As a fan of billiards, I subscribed to listen to the episode about the last pool hustler, but ended up bingeing the entire series. The rest of the episodes are great as well. The moral of the story isn’t that most folks can beat the house—they can’t—but that if you design genuine strategies based on a knowledge of the data/industry underneath you can make some money.
Twitter Threads
Kasey Moore’s tweet begs the question of whether or not Netflix is finally feeling the Covid Content Crunch:
Lastly, this is the best news you will read on Covid-19 today:
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(If this email was forwarded to you, and you’re wondering who I am, The Entertainment Strategy Guy writes under this pseudonym at his eponymous website. A former exec at a streaming company, he prefers writing to sending emails/attending meetings, so he launched his own website. You can follow him on Twitter or Linked-In for regular thoughts and analysis on the business, strategy and economics of the media and entertainment industry.)