Should-Read: Ben Thompson: Netflix’s Earnings, Netflix’s Price Raise, Additional Netflix Notes: "Netflix has a completely orthogonal strategy: content is only valuable if it is evergreen...
...that means drama, comedy, documentaries, movies, etc.... A live event... does nothing to retain an audience, or draw an audience once the event has passed; evergreen content, on the other hand, not only draws audiences at the time of release, but also retains audiences over time and is accretive to the lure of would-be audiences in the future. That leads to the differentiation I suggested was shown in Netflix’s results...
- the company’s expanding stable of original content draws new customers, retains old customers, and attracts marginal customers not just today for for years to come....
- that Netflix is international by default... means... a far larger addressable market over which it can spread the fixed costs of content acquisition. That Netflix can reach the entire world is, of course, a consequence of the Internet and Netflix’s advantage here is that of an aggregator....
- Netflix’s budget is defined not by its current user base but rather by its anticipated user base of the future — that is the luxury of growth. Most of Netflix’s competitors, on the other hand, are facing a declining user base. This advantage is not just financial but also psychological.
These sustainable advantages were all over Netflix’s investor letter and earnings call...
