Its Lead Position Has Not Changed, But How It Is Winning Has

parqor Netflix

Summary of Newsletter #222

In this week’s PARQOR mailing, I dove into Netflix’s Q2 earnings report and earnings call.

Last February, IAC Chairman Barry Diller offered this take on the streaming wars:

Netflix has won this game. I mean, short of some existential event, it is Netflix’s. No one can get, I believe, to their level of subscribers, which gives them real dominance. They can outbid, and do…

The context for the quote was, Netflix had just announced a monster quarter in growth and earning, and they announced record viewership for the surprise hit bird box over the Christmas holiday. Diller’s enthusiasm and conviction, then, were justified.

Two developments last week reminded me of this quote.

The first was Netflix’s Q2 earnings report and call transcript. It just had another extraordinary quarter, made all the more extraordinary by its ability to continue to produce content despite delays created by COVID.

The second was a combination of stories about Netflix’s streaming competition which reflected their challenges. This excellent, must-read CNBC interview with Roku’s Scott Rosenberg about the HBO Max and Peacock negotiations; and the news that WarnerMedia’s HBO Max will lose its rights to all eight Harry Potter movies three months after the launch. Meanwhile, Peacock is losing or will lose the Jurassic Park trilogy and The Matrix trilogy shortly after launch.

I realized that Diller’s conclusion is still correct. but all recent evidence suggests how we get to that conclusion is different from how Diller did.

Click here for a deeper dive into Netflix’s Q2 2020 earnings, and how its path ahead is different one year later.

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