Netflix executives made some of their largest-ever comments on Disney’s increased streaming efforts during their fourth-quarter earnings interview.
They spoke during the company’s video earnings interview, hosted 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 reporting period and 37 million subscribers in 2020, well above projections. That’s 203.7 million, well ahead of Disney + ‘s 86.8 million, but executives have been a little more open than usual when it comes to seeing mouse ears in the rearview mirror.
“It’s very impressive what Disney has done,” said founder and co-CEO Reed Hastings. “It’s an incredible accomplishment for an incumbent to spin … that’s great. And it shows that members are interested and willing to pay more for more content because they are hungry for great stories. And Disney has some great stories. “
Reed Hastings and Ted Sarandos, Co-CEO of Netflix, upbeat about the Windows crash in the cinema and the competing HBO Max Day & Date model
Within the company, he continued, “It drives us to increase our membership, increase our content budget, and it will be great for the world to see Disney and Netflix competing show after show, film after film. We’re very excited to see her in family animations – maybe we’ll overtake her at some point, we’ll see that there is still a long way to go to catch her – and keep our lead in the general entertainment that is so stimulating. “One example, he added, is the Bridgerton created by Shonda Rhimes,” which I don’t think you’re going to see on Disney anytime soon. “
Hastings’ reference to the Rhimes outbreak had a little more mustard as Rhimes pulled out of ABC, her home for Grey’s Anatomy and other series, to sign a blockbuster deal with Netflix. The show appears to be on the verge of a refresh and was reportedly seen by 63 million households in its first 28 days. She is number 5 of all the original series starts on Netflix.
Host Kannan Venkateshwar, an analyst at Barclays, drew sustained responses from four of the five executives in the results interview when he asked about Disney. The nature of the answer had a lot to do with how he phrased the question. “It almost feels like Netflix is below average compared to its potential and has to work a lot harder to reach a comparable magnitude,” said the analyst. “Are there reasons why the Disney numbers aren’t a benchmark for Netflix and why the company can’t get there?”
Founder and co-CEO Reed Hastings, though smiling, repeated the word “underachieving” with mock astonishment, showing some of his well-developed tech founder backbone. He figuratively pointed to the scoreboard and noted the 40% annual return for Netflix shareholders since the company’s IPO in 2002. “If this is an underperformance, we’ll do more of it,” he said with a smile the lips.
“When you talk about it in a competitive way, think about Christmas Day 2020,” said Co-CEO Ted Sarandos of the streaming landscape. During the holidays, Wonder Woman and Soul debuted on streaming services HBO Max and Disney + due to the closure of the Covid-19 theater in 1984, with WW84 also getting a small amount of plays. According to Sarandos, viewing was healthy for both of them, in addition to the heavy Netflix consumption while on vacation. This proves that adding customers to Netflix with additional subscriptions is a “super healthy dynamic”.
Spencer Wang, who heads investor relations and also participates in the quarterly earnings interviews, added his own perspective. “I don’t want to take anything away from what Disney did because it was amazing and I’m a happy customer myself, but 30% of the 87 million paid subscribers were Hotstar (in India) which I think is all different in service”, he said. He continued to highlight other competitive advantages for Netflix, including higher global penetration and revenue per user more than double that of Disney based on the latest quarterly figures.
Sarandos broke in with a loquacious laugh and teased Wang to diplomatically divert the conversation. Along with COO and Chief Product Officer Greg Peters, who also noted the “virtue cycle” caused by Netflix revenue, Wang had deviated in particular from Hastings’ “super impressive” start to the Disney portion of the interview. “You took the bait!” the co-CEO reprimanded. “Kannan tried to get us to hit the chest more.”
Before the interview, it was noticeable to see the company’s stance on competing services in its quarterly letter to shareholders. In the past, the document has cleverly indicated that Netflix’s main competitor is the video game Fortnite or even Sleep. This time, media competitors were recognized by name and Disney’s progress was even highlighted with an exclamation point. “It’s a great time to be an entertainment consumer,” raved the letter.