This year marks a pretty significant upgrade in the amount of data we have available about streamers. At the start of the year, we had to rely on Netflix to tell us during the quarterly earnings (or selectively on Twitter) how well their content is doing. Since then, we’ve gotten regular Nielsen reports, Netflix’s daily top ten lists, and multiple different analytics companies selectively releasing data points for us to chew over.
With all that data, we can begin to analyze how well each streaming company is doing in any given quarter. If you believe, like I do, that…
Popular content —> Higher Usage —> Higher retention —> Higher subscriber totals
…then this seems like pretty valuable information. And this is the first earnings report (Netflix publishes their Q4 2020 report tomorrow) where we can really unpack all that data.
Initially, I had hoped to make some quantitative predictions about Q4 2020 compared to past years and quarters. But frankly, I don’t have enough information to do that confidently. (We’re firmly in small sample size territory.) What I can do is provide a quick look at Netflix’s Q4 content. Then we can try to do what analysis we can and make some inferences.
What Does Nielsen Say?
Nielsen’s data has been the most useful new data source we have this year. Specifically, because it shows the volume of consumption for a given show, week by week.
The limitations are time frame and the total minutes viewed. Nielsen has only been providing a public top ten list since August. They provided me with data back to April—and I found three data points in March—but that still only provides us three quarters of data. Thus, we can’t compare to Q4 of last year.
Further, since the top ten list only has ten spots, we don’t get a full picture of Netflix’s original films and series. In particular, since Nielsen measures at the series level, some licensed titles are overrepresented. For example, four shows have made up a huge portion of Netflix’s viewing and three of them make the top ten list every week, meaning this is a top seven list for new Netflix shows/films at best. Usually less.
With that in mind, how does the picture look for Q4, given that we are missing two potentially big weeks of data (the last of the year)?
I tried to play around with this data in a lot of different ways to show the average by month and by quarter, but given that Nielsen starts at different times of the month, it made March—the crucial month—look funky. Here’s the average per week by quarter:
So if we use Nielsen data, that means that Netflix is having a better quarter than Q3, but still dragging way behind the end of Q1/start of Q2 peak. I can’t stress how good Netflix’s March in the U.S. was with Spenser Confidential to start, Tiger King on 20-March and Ozark on 27-March. Remember, Ozark would be the most watched original on Netflix for the whole of 2020. Compared to that, though, November was good for Netflix. Both The Crown and Queen’s Gambit simultaneously did well.
Is viewership of the top ten correlated with viewership of the platform as a whole? In my experience, absolutely. Though I can’t quantitatively prove it here.
What Does Netflix’ Datecdotes Say?
As a reminder, these are…
The total number of subscribers who watched 2 minutes in the first 28 days, globally.
Fortunately, since changing from “who watched 70%” in Q4 of 2019, Netflix has stayed consistent on using this metric. Thus, by my measure, Netflix has released 66 datecdotes from Q4 2019 to Q3 2020. Notably, the number of datecdotes are increasing every quarter:
Using this metric, how did Netflix do? Let’s start with film. The challenge is that there are so many different ways to cut the data. So here’s Netflix’s films that netted over 38 million subscribers globally over time:
You can see a few of the problems with this data. To start, we can’t use it to predict Q4’s performance, since Netflix has only released one movie data point for Q4 so far. Further, it’s noisy and it’s not clear that it’s correlated with adding subscribers. For example, Q3 had a number of 70 million plus viewed films, but it didn’t help Netflix grow subs in Q3.
This is also a “tale of two data measurements” problem. If films are measured simply in total numbers, Netflix is growing each quarter. Measured by the percentage of folks tuning in, it’s shrinking.
Let’s switch over to TV. In this case, Netflix has released three datecdotes so far, and the picture looks slightly better:
In both cases, though, the big performance of The Queen’s Gambit and Bridgerton will likely pull up the content performance of this quarter. The Crown did very well in Nielsen’s rankings, so it could pull up the average as well.
How Do the Q4’s Compare Over the Years?
Interestingly, Netflix has tended towards a similar release strategy the last few years: release a big Christmas film in the middle of November, release the awards bait at the same time, release a big movie to close out the year and a big TV show as well. Here’s the last 3 Q4 release plans:
So can we learn anything here? I’d say not really, until we learn the rest of the Netflix datecdotes to round out 2020.
What Datecdotes Could We Learn Tomorrow?
As you can see, we don’t have the data points for this quarter. (Which I just mentioned above!) We only have four, and they’re lagging their analogues from previous quarters.
Looking at the films that made the Nielsen Top Ten, we can see the trend with the films Netflix has provided a datecdote for.
Looking at this, we can say fairly reasonably that Hubie Halloween and Christmas Chronicles 2 will likely get the “datecdote” treatment this quarter. Hillbilly Elegy would be a good bet too. A California Christmas is on the borderline.
However, with Nielsen’s data, this doesn’t have to limit us as much as it did in the past. Specifically, we can also have a range for what we think Netflix’s datecdotes will be. Let’s be clear, this isn’t the most complex data analysis in the world. I’m basically making a scatter plot and having Excel draw the line through it for me. Still, the correlation is fairly tight (.85):
In other words, I’m guessing that we’ll hear data points about Hubie Halloween at around 74 million viewers, with The Christmas Chronicles 2 potentially well above that (92 million). Hillbilly Elegy would be around 50 million viewers. Here’s the ranges:
With this, we could update the Q4 comparison above to see the potential growth in total viewers:
As for the TV side, forecasting there is a mess for a bunch of different seasons. The most likely datecdotes for Q4 are The Haunting of Bly Manor, Virgin River, and The Crown. The Office could be a wildcard flex by Netflix as it leaves. Emily In Paris and Selena are less likely but possible.
Add It All Up: What Do We Have?
Since Netflix dropped Bird Box’s rating on us in Q4 of 2018—what I’m calling the “Netflix Measurement Era”—here’s my quick take on how well Netflix has added subscribers, along with some of the biggest content per quarter:
Looking at that table and focusing on 2020, I’d spin this story:
Netflix started off the year 2020 strong with The Witcher being one of the most popular series around the globe. (It was released in the last week of 2019.) Then, when people entered lockdown for Covid-19, Netflix also happened to have some of its most popular content of the year at the same time, Money Heist (3-Apr), Ozark (27-Mar) and Tiger King (20-March). This led to big subscriber growth after the first quarter and into the second. However, Q3 didn’t have any breakout hits to drive significant new subscriber growth.
Indeed, this weak slate in Q3 led to the smallest U.S. growth since Q2 of 2019, the smallest global subscriber growth—1.1% —of the last two years, and missing the estimate.
So looking at the data from today, does Q4 return to Q1 levels, or merely hold steady?
I’d guess hold steady.
Subscriber growth isn’t solely driven by content. The Covid-19 lockdown definitely drove growth and price increases (like this last quarter’s in the U.S.) can also slow it down. That could be as much the story of Q1 and Q2 as anything else. (Q2, in particular, felt light for content after March.)
Looking at the Nielsen data and the datecdotes so far, I’d say Netflix is definitely having a better quarter than Q2 and Q3, simply because Q4 was trending upwards and Bridgerton/The Midnight Sky will likely finish very strong for Netflix.
That said, this doesn’t look like Q1’s big subscriber growth, does it? The March slate for Netflix happened to come right when folks were binging like crazy. A perfect storm of good content for the right time.