Netflix executives have offered some of their extensive comments so far about Disney’s intense streaming efforts during their fourth-quarter earnings interview.
They spoke during the company’s video earnings interview, moderated by a single Wall Street analyst and posted on YouTube, after the company reported strong financial results for the fourth quarter. Despite increasing competition, Netflix added 8.5 million subscribers during the period and 37 million in 2020, well ahead of forecasts. That brings it to 203.7 million, well ahead of the 86.8 million for Disney +, but drivers were still a little better than usual at seeing mouse ears in the rearview mirror.
“It’s super impressive what Disney has done,” said Reed Hastings, founder and co-CEO. ‘It’s an incredible performance for a incumbent … so it’s great. And it shows that members are interested and willing to pay more for more content because they crave great stories. And Disney has some great stories. ‘
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Within the company, he continued: ‘It’s getting us excited about increasing our membership, increasing our content budget and it’s going to be great for the world that Disney and Netflix are competing series after series, film after film. . We are very excited about the fact that they are caught up in family animation – maybe we will eventually pass, we will see that there is still a long way to go to catch them – and keep our lead in general entertainment that is so stimulating . An example, he added, is the Shonda Rhimes-created Bridgerton“What I do not think you will see on Disney anytime soon.”
Hastings’ reference to the Rhimes outbreak had a bit of extra mustard, as Rhimes of Disney owner ABC, her home for Grey’s Anatomy and other series, to sign a blockbuster deal with Netflix. The show seems to be on the verge of a renewal and was reportedly watched in the first 28 days by 63M households, which is considered the number 5 everyday original series launch on Netflix.
Moderator Kannan Venkateshwar, an analyst at Barclays, drew sustained reactions from four of the five executives who took part in the earnings interview when asked about Disney. The nature of the response had a lot to do with the way he defined the question. “It almost feels like Netflix is underperforming against its potential and has to work much harder to get on a comparable scale,” the analyst claims. “Are there reasons why Disney numbers are not a benchmark for Netflix and why the company can not get there?”
Founder and co-CEO Reed Hastings, though smiling, repeats the word ‘underachievement’ with mock surprise and displays a bit of his well-developed technological founder backbone. He figuratively pointed to the scoreboard and noted that the annual rate of return of 40% has been to Netflix shareholders since the company became known in 2002.
“When you talk about it in competitive terms, you think of Christmas Day 2020,” co-CEO Ted Sarandos said of the current landscape. Due to the closure of the Covid-19 theater on holiday, Wonder Woman 1984 and Soul debuted on streaming services HBO Max and Disney + respectively, with WW84 also getting a little bit of theatricality. The view of both was healthy, in addition to the strong Netflix consumption during the holidays, Sarandos said, proving that customers complement Netflix with extra subscriptions is a ‘super healthy dynamic’.
Spencer Wang, who heads investor relations and also participates in the quarterly earnings interviews, added his own perspective. ‘Not to take anything away from what Disney did, because it was amazing and I’m a happy customer myself, but 30% of their 87 million paid subscribers were Hotstar (in India), which I think is all different . service, ”he said, emphasizing other competitive advantages for Netflix, including the higher penetration worldwide and the revenue per user that is more than twice that of Disney, based on recent quarterly figures.
Sarandos infiltrated Wang with a laugh and teased as a way to divert the conversation diplomatically. Along with COO and chief product officer Greg Peters, who also takes note of the ‘virtuous cycle’ created by Netflix revenue, Wang in particular shifted from the ‘super-impressive’ start of Hastings to the Disney portion of the interview. “You took the bait!” indicated the co-CEO. “Kannan tried to make us brush even more.”
Prior to the interview, it was striking to see the company’s position on competitive services in its quarterly letter to shareholders. Historically, the document has made sneaky references to Netflix’s main competitors, namely the video game Fortnite or even sleep. This time, it recognized competitors by name and even highlighted Disney’s progress with an exclamation point. “This is a wonderful time to be a consumer of entertainment,” the letter reads.