Q2 2015 Netflix results were the jumping off point for a far ranging discussion on the state of our industry this week. Will thought that Netflix results were particularly notable in the US, where the company gained 900,000 subs, well above performance in previous second quarters. I liked the International growth numbers, which were even better than in the US. Foreign subscribers increased over 11% in just the last quarter.
Both Will and I agree with Netflix, that it is the content that is driving growth. With no price increases on the horizon, the company continues to invest heavily in new content. It predicts it will spend $5B next year on content.
Part of that investment is being used to create movies, and Netflix wants to use movie theater owners to help it stand apart (and above) typical Netflix shows. To do that, the company will release some of the movies in theaters the same day they are available on Netflix. I wasn’t sure there was any benefit to movie theater owners if they do this.
Reed Hastings talked about how Charter has said it will not charge interconnection fees as part of its attempt to persuade regulators to bless the TimeWarner Cable takeover. This led to a discussion of the benefit ISPs get from Netflix. I thought it might help sell broadband and get people to upgrade, but Will didn’t agree.
Finally, we discuss how Netflix is resisting being bundled together with other content and services by operators. For example, Orange in France markets Netflix and handles billing, but the SVOD service still appears as a separate line in the customer’s bill.
Chapter 1: Netflix US results (0:40)
Chapter 2: Netflix value for money (5:00)
Chapter 3: Content investment (6:30)
Chapter 4: International growth (6:55)
Chapter 5: Relationship with movie theaters (10:50)
Chapter 6: Charter and interconnection charges (14:30)
Chapter 7: Does Netflix benefit ISPs? (15:40)
Chapter 8: Netflix won’t be submerged in a bundle (20:15)