Month: December 2018

Most Important Story of the Week and Other Good Reads – 21 December 2018: The Future of Digital Measurements

Happy Holidays! I’ll be off next week as will most other entertainment news outlets and hence news. As I said in the last update, I won’t be writing a “year in review”–though I’ll be putting up some old posts over the next few weeks for new followers on Twitter–because I only wrote articles for half of 2018, and I also think that “the year” should “end” in August for entertainment coverage. It’s a more natural stopping point.

Either way we still had some fun stories this week, and a lot of good reads as people started their year end coverage.

Most Important Story – CBS May Drop Nielsen

Variety reported an exclusive story that CBS and Nielsen were negotiating a contract renewal, and CBS may drop Nielsen. Part of me said, this is actually “lots of news with no news” because the contract hasn’t actually been dropped. (And Hearst re-upped their contract.) I prioritize events happening over coverage of potential events–like potentially dropping coverage–because so many non-events happen in the news.

But, this wasn’t actually “lots of news”. It was barely covered. I saw the exclusive on Variety, but didn’t see a lot of echoes of it because measurement services aren’t the biggest drivers of clicks, are they?

That said, the future of measurement is a TREMENDOUSLY HUGE issue for the future of entertainment. Especially as it regards to transparency. It’s tempting to make exaggerated predictions going either way on this:

Exaggeration 1: Nielsen will die and we will have no measurements!

Exaggeration 2: Netflix and Amazon watch out, someone will figure out all your measurements!

I’ve made both predictions. So silly me.

The future is likely somewhere in between, which is bad for consumers and talent (with smaller production companies included in talent). It is definitely possible to have measurements of streaming video and everyone from HubResearch to TVTime to Nielsen itself has started tracking this. So we will have the visibility into some of the viewership metrics that Netflix and Amazon fear. At the same time, this won’t be as granular as the data they have in-house, so we won’t be even better at tracking cross-platform. And we also will have less clarity because the era of a dominant researcher providing universally accepted metrics–Nielsen–will end, which means firms can cherry pick from the different measurement services even more in the future.

Long Read of the Week – “The Year in Netflix” by Joe Adalian

As a news media, we need more “longer views”. Like my fifty year newspaper reference from las tweek. And this week we had a great one in this look back on the year of Netflix by Joseph Adalian at Vulture. Man, I really want to steal this idea and do a “year back look” on every major company in entertainment and am debating doing that in 2019. (There are only about 5 entertainment companies, left so it won’t be hard.)

Joe really covers the content side of the house, with some remarks on what this says about Netflix’s strategy. If I had a complaint, though, it would be that I didn’t see enough on the business-side. That wasn’t Joe’s intention, but it’s obviously what I care most about. For example, while he referenced subscriber growth to indicate success, he left out a key number:

Where was the Netflix free cash flow numbers?

Listen, lots of metrics are good and useful at forecasting future financial performance of firms. Revenue, EBITDA, Profit/Loss and subscribers, for example. Throw in return on assets too, if you like The Goal. But in my opinion, Free Cash Flow reigns above them all. Because it is the absolute hardest number to fake, which some accounting tricks still do.

Way more importantly, free cash flow is the basis for “Net Present Value” which is a core–if not THE core–foundation of finance. Add current and future costs, and subtract future revenues discounted for the time value of money (all of that explained here in a great explainer on the Time Value of Money that even President Trump doesn’t understand!) and you understand if something was a good investment. Right now, Netflix streaming video has lost its shareholders something on the magnitude of over $4-5 billion dollars since it launched and will lose another $3 billion this year. That will take decades to earn back, if they ever do. Which would be, you know, negative net present value. That seems bad.

Table 4

Oh, and as I referenced in a tweet, the section on international productions being a huge advantage for Netflix is an opinion I don’t share. It really got my goat. But when you write over 40 tweets, well then you need to write an article on that, not tweetstorm. Something to look forward to in the new year.

M&A Update – Deaths of the MCNs

Here’s a serious question for my serious readers…are there any MCNs left?

I bring it up because when I was in B-school, MCNs were hot. (MCNs stands for multi-channel networks, and were collections of Youtube channels that shared marketing, branding and ad revenue, for those who don’t know.) The business news events of the years while you are in business school have an outsized impact on your thinking. So for me, MCNs circa the early 2010s were a hot business. Lots of the “entertainment-focused” students were targeting them for employment. Shortly after I started work, Disney made a huge splash with a reported, but then downgraded, $1 billion acquisition of Maker Studios.

But a few weeks back Warner Media–formerly Warner Bros, and now part of AT&T–rebranded Machinima and revamped distribution. I think people were let go. Viacom now owns AwesomenessTV, but mainly acquired the debt as opposed to acquiring the value of the company. I haven’t heard much from Makers Studios at Disney, but believe they wrote down that deal too.

The lesson is always pay attention to the fundamentals. And don’t let large acquisitions convince you something is worth that high valuation. Always look at the fundamentals.

Fun idea – David Nevins on Making TV Shows

In an interview at a UBS conference, CBS Chief Creative Officer David Nevins said this, (bolding mine):

Nevins was asked about CBS’ content strategy, as it produces some 75 television shows for its own platforms — the broadcast network, Showtime, CBS All Access and The CW — as well as for third parties like Turner. He said the media company would continue to do deals that make the most financial sense, and wouldn’t be restricted to creating shows exclusively for its own platforms.

Remember “net present value” I just described above? Another way to describe what Nevins said is, “We will do deals that maximize our “Net Present Value” of produced content.” To simplify, if a competitor offers to pay you $100 million dollars for something you could make $10 million on your own platform, you sell it to them and give the $90 million extra to shareholders. His math is right.

The implications, though, aren’t for traditional media & entertainment conglomerates. They’re great at valuing media. The implications are for streaming channels like Netflix and Amazon Video/Prime/Studios. If someone offered them $100 million dollars for something they could make $10 million on–meaning generate retained and acquired subscribers whose CLV (explained here) would equal $10 million–they’d pass. That seems…bad. As I’ve written a variation on this theme a dozen times by now, I’ll have to walk everyone through that in a future article.

Management Advice – Pay Attention to Biases in Hiring

If you want to read a great article on how subtle biases effecting decisions, I recommend this Kevin Drum piece on astronomers. No really.

Listen, I’m not asking you to read it because of the obvious reasons like improving diversity in the workplace or decreasing socio-economic inequality. Diversity and equality are good values. Instead, I want to appeal to you the capitalist looking to compete. If you’re hiring worse workers, that’s bad. Your biases could cause you to do that. So consider ways to remove your biases from the process.

 

 

Don’t Cross the Streams: Streaming Video Metrics…Explained!!!

A few months ago I briefly tried to explain the distinction between “customers” and “views” to help explain why Twitch is often over-hyped. Since I’ve spent a lot of the last two weeks banging my head against the Twitter wall insisting that we stop letting Netflix use misleading data, it seems time to break out that explanation into its own post.

To see the need for this, let’s look at a handful of recent Netflix announcements. They provide a case study for how a service can use multiple metrics that all kind of mean the same thing but all don’t. Worse, a lot of the journalism covering these reports mix up the different words. In 2018, at some point, Netflix has said…

80 million customer accounts watched a type of movie.

Customers watched 20 million streams of a single movie.

80 million customers watched a type of movie 300 million times.

In one day, Netflix had a total of 35 million hours viewed.

In those four datecdotes, we have, really, three different concepts: streams, hours and customers. The key is understanding how they all interact so we don’t use them haphazardly or misleadingly. If this explanation comes across as obvious, well apologies in advance. But as I think about it, I didn’t know it before I worked at a streaming video company, did I? Nope, and I spent a lot to time explaining to senior leadership what our numbers did and didn’t mean. 

So let’s get started at the smallest level. 

The Starting Point: An entry in a database

To understand where all the streaming numbers come from, you first have to understand that every data point for a streaming video company comes from somewhere. That somewhere is a single entry in a database. 

Yeah, it seems obvious, but worth mentioning. There is a database that holds the record of every customer’s every interaction with Netflix, Hulu, Amazon, CBS All-Access, Showtime, DC Universe and Youtube. And any new streaming service down the road. That’s where all the data comes from. A massive database that tracks every interaction.

The key is that lowest level, “the interaction”. The specific details around the record will differ by company and for different reasons. But the general broad strokes are the same. These interactions are then complied and collated and analyzed to develop all the other advanced metrics.

A Sample Entry Explained

The best way to visualize an interaction is to see a sample. So let’s see what a sample database entry looks like. This way you can understand the specific pieces of knowledge the companies can track. It starts with the “Five W’s” (who, what, when, where) and builds out from there. (The “why” is the key to good decision-making, and simple statistics can’t tell you that.)

Streaming Entry

An entry is generated when you—the user—clicks on a show or movie to watch on a streaming platform. That something can be a movie, TV show, trailer, commercial or whatever. Or piece of music for a streaming service. But the click via mouse click, remote control tap, voice command or finger tap starts the process.

Let’s just go through each piece. Start with the “who”. Every customer is tracked by some sort of customer ID number. This means that it tracks everything related to one account. I called this a “customer”, but you could call it users or customer accounts. Notably, it could be different than a “profile”, which Netflix has. (And if you have a “kids” section, then you are subject to COPPA regulations, and shouldn’t track identifying data, a different issue.)

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Most Important Story of the Week and Other Good Reads – 14 December 2018: The M&A Year That Wasn’t

I’m not writing a “year end roundup” article this month. I do want to do one of those next year, but I’ll write it in August. Why August? Well it makes a lot more sense than January. The box office peaks in summer, so we can judge it at the end of August. Plus, TV season ends in May-ish, so we can judge that too. It makes more sense to evaluate the media & entertainment landscape in August/September than December.

Which doesn’t mean the end of the year isn’t a great time to think longer term. I love the idea of the “fifty year newspaper”. (H/T to The Indicator who got the idea from Oxford’s Our World in Data) This is the question, what would be the headlines of the last “fifty years”, as opposed to for this week? We could use more of that in every part of media, and on different time frames.. Not just year end “roundup” articles, but articles that try to predict what the most important topics were that influenced life over the last three months, or five years or fifty, like the inspiration.

For business, mergers & acquisitions would probably take a lot of headlines. For instance, if I did a “six month newspaper”, would M&A news make it? It would, but not for why you think…

The Most Important Story of the Week AND M&A Update: Wall Street May Slow on M&A

The inspiration for this story this week was two parts. Part one was Verizon writing down the Oath acquisitions (AOL & Yahoo) that inspired CNBC’s Alex Sherman to write an article with the headline, that “at least Verizon isn’t AT&T”. He was echoed by Tara Lachapelle (who I’m reading weekly now, as should we all) that quipped that Verizon should maybe even exit media as a business.

In all these, got me thinking that maybe the market is reconsidering M&A. I even quipped this to Alex Sherman on Twitter. I flippantly referred him to my series on M&A to remark that the M&A tidal wave never came for media & entertainment. And guess what? He had already written a column with the headline-that-tells-it-all, “Wall Street Expects a Two Year Pause in Big Media and Telecom M&A”.

So I was about six months two early in my initial prediction!

Reviewing the M&A landscape a tad early–I expect some articles summarizing the year in M&A to pop up in January–I was right that the “pace” of M&A didn’t really change after Judge Richard Leon ruled in favor of AT&T back in June. Consider the “news”on M&A I’ve haphazardly collected over the last six months:

– SiriusXM bought Pandora

– Comcast bid on Fox, forcing Disney to raise its price

– Comcast beat Disney in buying Sky.

– CBS may still merge with Viacom

– Multiple bidders are trying to buy RSNs from Fox deal.

– Nexstar bought Tribune after the Sinclair acquisition fell apart.

Five of those six deals have been going on since last year. Really, the biggest news was that Comcast was freed from antitrust worries, so they leapt into the market, which mainly caused Disney to raise its buying price for Fox. (And they overpaid for another asset they were already interested in.) We still haven’t seen a major technology company swallow a traditional studio, and the studios that started the year not being acquired finished the year not being acquired. Is Pandora getting swallowed up huge news?

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Suspiciously Recurring Numbers and More Implications of The Netflix versus Crazy Rich Asians Debate

(This is the third part of a multi-part series exploring one specific Netflix number. To read the other pieces:

Introducting “Datecdotes”, when Streaming Companies use Data to Win the PR Wars

Did More People Watch Crazy Rich Asians or a Netflix Rom Com Last Summer?

Netflix versus Crazy Rich Asians: What Else Does Netflix “80 Million Customer Accounts Tell Us?)

Okay, enough skepticism. If we take the latest datecdote from Netflix, at face value, what can we learn from it?

Well, to start, let’s take a look at the history of “80 million” in Netflix releases…

What other evidence of “suspicious” numbers do you have?

In a future article, I’ll write about another “theme” of this website called, “Theme X: Be Skeptical”. Especially with competitors. Don’t give them the benefit of the doubt! 

One of the corollaries to that theme relates to data. The corollary is, “Be wary of large, rounded numbers.” Data isn’t often rounded so evenly. This applies to scientific studies, political causes and other social phenomena. Oh, and entertainment success stories.

I’d add, if the same company keeps repeating the same big number that would be weird, right?

Netflix has this problem with their original movies, and I don’t think anyone has pointed this out yet. Researching the “80 million customer accounts” I naturally googled to try to find every news source uncritically repeating this datecdote. Imagine my surprise when the first occurrence of 80 million accounts wasn’t October in the Q3 shareholder report, but actually in June!

See, their “Summer of Love” romantic comedies weren’t the first time they had “80 million customers” watch something. For example…

– In June, Reuters was given data from Netflix that 80 million customers had watched a Netflix Original movie in 2018.

– In June, Dana Feldman on Forbes also reported that 80 million customers had watched a “romance film” on the service. Rereading it, this looks like it includes both originals and licensed films. This came from a Netflix tweet.

Then in their Q3 letter to shareholders, Netflix repeated the 80 million customer accounts number.

Clearly there was some rounding going on. And for press releases or on information provided on background, Netflix is under no obligation to be precise. But let’s assume the numbers are close enough. If the baseline assumption is all Netflix movies combined get 80 million customers accounts involved, the “Summer of Love” films didn’t really boost viewership that much did they? Either for romance films or original films. Eighty million customers is just what big groups of movies promoted by Netflix tend to get.

But if I wanted to be skeptical, I mean, what are the odds that exactly 80 million customers watched an original in from January to June, which is the same number that over the previous year watched a “romance movie” and then, after two more months of Netflix rom-coms being released in the “Summer of Love”, they had all in 80 million customers watch an original romantic comedy? Is that crazy overlap, or three part coincidence?

What if we take all the recurring 80 million customers at face value? What can we learn from this number?

We can triangulate the floor for Netflix “Monthly Active Users”.

This is the biggest way that streaming video distributors, social platforms and subscriptions services in general try to game the narrative. A customer or user includes anyone who “samples” a subscription. So you order from Blue Apron, or start a Hulu free trial, or sign up for SnapChat. Those are all users or customers.

But Monthly Active Users (MAUs) is a much better approximation of who is actually using your service regularly. (Or weekly or daily active users, which are even smaller time periods.) That means actual people you can monetize through ads or monthly billing. With Netflix, we have no clue what their monthly or weekly active users are. Most social platforms include this in their SEC filings. Netflix does not—it isn’t a social platform—and instead focuses on “subscribers”.

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Netflix versus Crazy Rich Asians: What Else Does Netflix “80 Million Customer Accounts” Tell Us?

(For Part I of this series on Netflix versus Crazy Rich Asians, click here.)

If you can’t tell by my article last week, I had a lot of fun with my comparison between Netflix romantic comedies and Crazy Rich Asians. Unfortunately, I had a lot of ideas for that article that hit the cutting room floor. 

Some because they were too speculative, some to save room, and some to make a tighter narrative. (I had tried a long shot publication at a bigger outlet.) And some because I couldn’t prove them. So for a respected publication, it didn’t make sense.

But this is my website. I’m free to make all the speculation and ask all the tough questions I want to here. Since Netflix only provided me one number—80 million customer accounts watched an original romantic comedy the last summer—well, I want to ask that number a lot of questions. I want to interrogate that number to within an inch of its life. So that’s what I’m doing today. Asking—and answering—all the other questions inspired by this comparison.

What other “circumstantial” evidence did you leave out?

A few pieces, but one major one. Essentially, the major studios stopped making romantic comedies for two reasons. First, they don’t have a high enough “ceiling” in that they don’t ever tend to have billion dollar movies. Second, and crucial for our math, is that they also don’t tend to perform well overseas. This applies generally to all comedies. Comedy is a local phenomena so it’s rare for comedy films to do well overseas unless they are very, very broad. (Some of the broad sitcoms like The Big Bang Theory or Simpsons do travel. Others, I’ve heard, don’t.)

We’re seeing this right now. Aquaman is the number one movie in the world…and it didn’t open in America. Crazy Rich Asians, meanwhile, flopped in China. To show this effect, here’s some data. For my series on Disney’s Lucasfilm acquisition, I made a data set of 50 “franchise” movies. These provide a good set of comps for comic book movies and their ilk. As you can see, franchises now see 63% of the total box office come from overseas (and even this still includes a lot of old Star Wars and Indiana Jones data.)

Blockbuster TableNow compare that to romantic comedies. I don’t have as large a list, so I pulled some sample romantic comedies. The trend is clear…

RomCom US Inter Splits

Four recent romantic comedies that did “well”, had over 70% of their box office come from the US market. Crazy Rich Asians, notably, only had 22% of its total box office come from overseas. Compare that to massive blockbusters like Avengers or Pacific Rim, where over 66% or 75% of their box office came from overseas.

This has implications for Netflix. Mainly, three facts collide that can’t all be true simultaneously: 

– Netflix had 80 million customer accounts watch an original romantic comedy last summer.

There are 60 million US customer accounts. (Rounded up slightly.)

– US romantic comedies tend to have 60-40 splits in US to international viewing, sometimes as high as 70-30.

This puts us in an awkward place when it comes to the Netflix number. Based off Crazy Rich Asians and other romantic comedies, I could easily assume 60% of the viewership was US based. That leads to some really tricky “consultant math”. Go with me on these assumptions:

– Assume 60% to 40% domestic to foreign split on Netflix romantic comedies

– Assume 1.4 “viewers” for every Netflix customer account.

Black Panther sold 76 million tickets in the United States.

– Assume 15% rewatch rate for Black Panther. 

Here’s those assumptions, now it table form:

Screen Shot 2018-12-11 at 3.41.39 PM

Now, even worse than Netflix claiming it beat Crazy Rich Asians, if we take some conservative assumptions, more people watched a Netflix romantic comedy than the biggest movie in the US last year (Black Panther). Do you honestly believe that?

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Most Important Story of the Week and Other Good Reads – 7 December 2018: Youtube Pulls Back on Original Programming Edition

I should call this a round up of the last two weeks. Even though I got my column out on time last week, I had a lot of spill over ideas. So many stories that they bled into this week’s edition. (Which is late again.) Business-wise, the entertainment press had two stories dominate the news in the week of December 7th, one which matters and one which doesn’t. But first, our holdover article, with a key lesson.

The Most Important Story of the Week – Youtube Kills Original Programming

Or did they?

That’s a deliberately provocative headline not quite captured by, you know, the truth. But clicks, am I right?

In reality, Youtube is quietly pulling back from original programming. Or shifting their strategy to premiere originals on their ad-supported platform (just Youtube) instead of their subscription service. Along with this move will come a likely decrease in their overall spend and spend per show.

I don’t want to go overboard here. Like saying something like, “See all original programming is bad.” That sounds just silly on its face. Obviously, HBO was built by original programming. Actually, every broadcast channel was built by original programming. AMC and USA Network took leaps in popularity by leveraging original programming people liked. Netflix captured a lot of new subscribers with House of Cards.

But I do want to push back on what I see as the implicit assumption that “original programming = success”. Just making your own shows doesn’t give you a competitive advantage per se. It isn’t a panacea to all the problems ailing your business. This is another example of executives not being creative, but simply asking, “Well, what are they doing?”

That’s why I think economically-minded companies, like Youtube presumably, may pull back on original programming if it doesn’t work right away. Maybe they do have a flashy hit–like Cobra Kai–but the costs for that and the 10 to 12 other series may not cover their bills. In that case, you pivot away from original content. I’ve been bullish on Youtube for awhile, and I think the more they focus on Youtube and YoutubeTV, the better and more coherent their offering.

If you read Stratechery, you’ve seen Ben Thompson has his “aggregator theory” that I love. My only quibble is I’ve never understood why he applies this to Netflix as opposed to Youtube. (He actually does both.) Netflix is specifically not trying to aggregate it all, but Youtube is. If you have it all, you don’t need “just a little bit more”. You’ll get it eventually. And that shows why Youtube probably doesn’t need original programming.

Long Read of the Week – Youtube and The Pressure to Publish

While I’m on the Youtube train, I want to call out this article on Variety by Todd Spangler that has been sitting in my “to read” list for a while. I don’t have a ton of insight except that Youtube has problems that seem unique to it in the video world. Netflix is going to compete very traditionally with the big studio players by making big shows and streaming them. It’s just a different channel.

Youtube has to deal with, basically, it’s algorithm. The algorithm pushes people to extreme content. Or it burns out creators. Or it caters to children. Or it is addictive. It’s a fundamentally different problem that is both easier (fixing algorithms is easier than dealing with people) and harder (it cuts directly into revenue) to solve.

Other Contenders for Most Important Story – Technical Difficulties in PPV/Tiger and Phil Match

For those who don’t know, AT&T announced a giant pay per view golf match between Tiger Woods and Phil Mickelson. Since AT&T now owns Bleacher Report, they had the genius idea to have an option to purchase the event on BR too. Of course, the BR website crashed, so they offered it for free to customers, which bugged anyone who paid for it. So refunds were issued.

These refunds won’t bankrupt AT&T, and it looks like they’ll plow ahead with future PPVs in golf. Also, I don’t think this story portend some huge change for how we consume video content. So why was it almost the most important story of the week?

Because it provides such a great lesson on the relationship between “content” and “product”.

The lesson is one I’ve hit on a handful of times but will really emphasize going forward: product matters. Yes, content is king, but your product is right there. If the process to watch content is maddeningly difficult, then customer will find other ways or not watch. Content is king, but product may be the Queen. Or at least a rook.

Other Contender – Netflix keeps friends for $80 or $100 million, non-exclusively

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Did More People Watch Crazy Rich Asians or a Netflix Rom-Com Last Summer?

(This is the third part of a multi-part series exploring one specific Netflix number. To read the other pieces:

Introducting “Datecdotes”, when Streaming Companies use Data to Win the PR Wars

Did More People Watch Crazy Rich Asians or a Netflix Rom Com Last Summer?

Netflix versus Crazy Rich Asians: What Else Does Netflix “80 Million Customer Accounts Tell Us?

– Suspiciously Recurring Numbers and More Implications of The Netflix versus Crazy Rich Asians Debate)

The romantic comedy is dead. The highest grossing romantic comedy this year is Crazy Rich Asians, which at $174 million in domestic box office pales in comparison to behemoths like Black Panther ($700 million domestic box office), Avengers: Infinity Wars ($678 million), Incredibles 2 ($608 million) and Jurassica World: Fallen Kingdom ($416 million). Who shall return the romantic comedy to glory?

Netflix. Because of course Netflix.

This summer, Netflix released a series of romantic comedies it dubbed, “the summer of love”. In a letter to shareholders, Netflix celebrated their success. Here’s Vox writing about a particular fact Netflix provided:

This summer, Netflix invested in resurrecting the mid-budget romantic comedy, acquiring movies like Set It Up and To All the Boys I’ve Loved Before for what the streaming service branded as its “Summer of Love.” And now, it’s looking like the gamble paid off: Variety reports that more than 80 million subscribers watched one of the 11 rom-coms on the Summer of Love slate, according to Netflix’s quarterly earnings report.

Vox wasn’t alone in singing Netflix’s praises. They were joined by Variety, Screen Rant, The Ringer and others to write an article on Netflix’ new found success in romantic comedy. All using one “datecdote”, a term I coined yesterday.

In our hurry to constantly keep up with the news, we let little tidbits like Netflix’s above fact wash over us and move on to the next story. So let’s pause and reflect on the fact Netflix revealed. Does this fact seem true? Since Netflix didn’t provide a comparison, I will:

Did more people around the globe watch Crazy Rich Asians or a Netflix Romantic Comedy last summer?

It’s a tough question, isn’t it? If you answer that more people saw a Netflix romantic comedy, then why did the media spend so much time on the phenomena of Crazy Rich Asians? But if you think more people saw Crazy Rich Asians, then how can Netflix numbers possibly be true?

Streaming video companies, like Netflix, have a lot of data, a lot of ways they can manipulate that data, and, most crucially, a lot of data they just don’t give the press. But we can learn a lot about how movies are distributed and judged in today’s media landscape by trying to answer that tough question with the data and facts we do have.

So let’s do our best to get some answers.

How Many People Watched a Netflix Romantic Comedy?

On the surface, this is fairly straight forward. Netflix in their letter to shareholders—a document submitted to the SEC, so a legally-binding, carefully vetted document—used this phrase:

More than 80 million accounts have watched one or more of the Summer of Love films globally.

Netflix chose two words very carefully in the above sentence. First is “accounts”. Not “profiles” or “viewers” but accounts, since this is the only unit of measurement Netflix knows for sure. They know that because they have one account per credit card. I’ve seen this called “users” or “customers” at other companies. 

By definition, this is the floor for the actual number of people who watched a romantic comedy on Netflix. If two people watched a film together, well they still only count as one “account”. If two different profiles under the same account watched, they would still probably count as one. (It’s unclear.) If someone shares their password with someone else, but they use the same profile, that still counts as one view.

If account is a precise definition, “watched” is a term so loose that it could mean anything. For instance, Netflix could count as “watched”, a person who only watches ten minutes of a film and turns it off. They could only count as “watched” people who watch greater than 80% of a film, either by run time or who watched past the 80% point in the film. We just don’t know.

What we don’t know dwarfs what we little we do know. We don’t know how many total hours of romantic comedies were viewed. (Netflix, interestingly, loves to cite this number to describe how popular their platform is, but choose not to provide that fact here. For example, they released earlier this year that they had 350 million hours viewed in one day in January.) We don’t know where people watched—this is a “global” number—or even when. While presumably over the summer, it likely wasn’t a hard three month window.

How Many People Watched Crazy Rich Asians?

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