Category: Ideas

Nielsen’s New Top 30 Streaming Video Ratings…Explained! Plus a Visual of the Week

Starting last August, Nielsen began releasing a weekly American top 10 most watched list for streaming video. I’ve been using it ever since. Nielsen mixed together TV and movies, and new (“originals”), second-run and library (“acquired”) on the same list. 

In their year-end top ten list, though, Nielsen flipped the script and provided three different top ten lists. Formatting mine, with hours instead of minutes:

IMAGE 1 - Nielsen Top 10 2020

This was a sign of things to come. Starting with the week of Monday, December 28th, Nielsen is now publishing three top ten lists, one for “original” TV series, one for “licensed” TV series, and one for film. 

(Man that’s a lot of definitions. In the future, I’ll define them all. But for now, this article from 2019 has a good explanation of the definitions I use to analyze content.)

Whenever a firm changes their data definitions, I tend to get extra cautious doing analysis. For example, when Netflix went from calling a view “2 minutes watched” from “70% viewed” a lot of folks continued as if nothing had changed in the numbers. This violates the number one rule of data analysis: keeping things apples-to-apples. (My solution was to convert all the numbers to the same metric, using Netlfix’s average 35% inflation between the two numbers.)

That’s a worry here. Unless Nielsen provides me with an expanded database going back through 2020, most of our data will now be cleaved into “2020 Top Ten” data and “2021 Top 10×3” data. Thus any analysis of 2020 to 2021 data will need to factor in that it may not be “apples-to-apples”.


…this is still great news.

Here is the the synthesized Nielsen top ten list for the last two weeks of Nielsen data, if Nielsen had continued the old methodology:

IMAGE 2 - Top TenIMAGE 3 - Top Ten

Now, we can compare this to the new, combined top 30 lists:

IMAGE 4 - Top 30 List

IMAGE 5 - Top 30In other words, that’s a lot more data to parse! More data means more analysis! More analysis means more insights!

Previously, any of the data from The Mandalorian on down in the week of December 28th and all the titles from The Crown from January 4th would have been invisible to us. Moreover, we can confidently say that this list is a clear top 23 list one week and a top 21 list the next. (Basically, anything above the first “10” on the list by logic is in order.) 

Overall, this expansion should greatly help our understanding of how content is performing in the streaming wars:

– Previously, original films on Netflix and Disney all dropped off the Top 10 list after two weeks. This will allow us to track film decay with greater fidelity. (For example, The Midnight Sky would have only had one week of data before.)
– We’ll also get more films on the list, being able to clarify which films underperform their openings more often. (For example, We Can Be Heroes made the list.)
– This will also let us track TV series decay as well. As we’ve written before, four of the ten top spots in this list were usually held by licensed second-run and library content on Netflix. This essentially gives us 10 or more original titles to review each week. (For example, The Mandalorian would have dropped off the week of December 28th. The Crown would have dropped off the week after.)
– More spots should potentially allow more non-Netflix series and films on the list. This will allow us to compare performance trends between the streamers as well. Right now, Disney+ and Prime Video shows dropped off after a week or two. This will enable to track their decay as well.

For example, in the past Soul would have just eked out staying on this list. (The first film to make the top ten for three weeks in a row.) But The Midnight Sky (72 million global 2 minute views, Netflix revealed in their earnings report) would have dropped off. Same with We Can Be Heroes (53 million global 2 min views) would never have made the list. Now I can make this chart:

IMAGE 6 - Feature Film Decay

Interestingly, all the films featured big drops in viewership (44% for We Can Be Heroes and 56% for The Midnight Sky), but Soul didn’t see its big drop until week two to three (61%).

As a reminder, Nielsen doesn’t track HBO Max data yet, so we don’t know how Wonder Woman 1984 fared in its second week.

Visual of the Week – Netflix Films Do Much Better Weekly; Disney+ Films Do Better All Year

When Nielsen only released a single top ten list, films only made the list when they were newly released, such as Mulan, Borat’s Subsequent Moviefilm and Netflix’s regular releases. As such, when Nielsen released a cumulative top ten list for film in 2020, the results were very skewed towards Disney’s rewatchable films:

IMAGE 7 - Nielsen Top Ten FilmWhen we look at the weekly rankings of movies, the Disney dominance isn’t quite as strong:

IMAGE 8 Various Top TenWith a now weekly top ten list, we’ll be able to get a different perspective on the competition between Disney and Netflix for, frankly, kids viewership. Some insights:

– Kids programming still dominates the film list. For this week, 11 of the top 20 are targeted at kids. And one is a teen comedy. (17 Again)
– Netflix does better in a weekly top ten, due to their size. Indeed, this shows that the split between Disney+ and Netflix is much closer in kids content than it seems. However, Diseny+ does seem to still be winning.
Rango was misidentified as being on Prime Video. It is currently on Netflix exclusively in the US. Nielsen has confirmed this.
– That said, it does look like Amazon did get one genuine film on the list with Catch Me if You Can. It’s their only entry in the three top ten lists for the last two weeks.
– Interestingly, like original TV, Netflix’s films are skewed towards new releases. Of the 13 Netflix films on the list the last two weeks, only 1 was released before December 25th, which was The Croods. Thus we can see that whereas Disney+ sustains interest in their small library of kids content, Netflix relies on recent releases, even on licensed kid content.

Netflix’s Step One Was to Break Even, The Next Step is to Generate Massive Cash Flow – Most Important Story of the Week – 22 Jan 21

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When a Netflix earnings report comes out, it generates lots of news. Usually, though, they don’t claim the top spot in my most important story of the week, because not much really changes.

This week, though, Netflix did make some news. So let’s make it…

Most Important Story of the Week – Netflix Is Forecasting They Will Break Even in 2021

Sometimes, usually even, the coverage of a Netflix earning’s report focuses around the wrong thing. For most years, that meant subscriber counts, regardless of what else happened in their financial statements. Not this week! 

On Tuesday of this week as Netflix released their 2020 performance, most coverage correctly focused on this announcement from Netflix:


If Netflix can truly achieve a breakeven year for the first time since 2011, that is a big deal. I’ve long looked past subscriber counts to obsessively focus on cash flow. That’s why this is big cash flow news from Netflix.

However, even if most reporters got the most important story right, they missed a lot of the nuance and flavor around how important this story is. For example, look at CNBC’s last bullet point. Does one year of positive cash flow validate Netflix’s strategy?

This is where I need to step in. While turning cash flow positive is clearly a positive sign for the world’s biggest streamer, frankly this one announcement doesn’t validate Netflix’s entire strategy. Instead, what happens in the next 5-10 year period will be crucial.

The Two Strategic Decisions (Investments) Made by Netflix in 2007-2015

Yes, we have to go back to 2007 to explain this history of Netflix. Back then, Netflix shipped DVDs through the mail to customers. And they made a lot of money doing it! Specifically, in 2008, they generated $94 million in cash. (Technically free cash flow. We’ll be using that instead of profit since free cash flow is really the driver of modern finance.) 

Reed Hastings rightly forecast that DVDs were a transitory medium. Someday, they’d be replaced by digital transmission. Instead of letting his company be disrupted as he disrupted Blockbuster, he’d run the company that would digitally transmit those shows and films. In 2007, Netflix launched streaming video in the United States. And the rest, as they say, is history.

Well, not quite. Reed Hastings made the decision to pivot correctly. But he had another decision to make. And the second decision Reed Hastings made wasn’t just to launch a streaming company, but to launch one that was financed through losing money. Lots of money. Billions of dollars. You can see this in the history of streaming. From 2007-2011, Netflix isn’t making tons of money, but they’re also not losing money. Then, from 2012 on…

IMAGE 2 - NFLX FCF to 2020

What I love about this look is that it shows that Netflix really did have a choice to make in 2011. They could have continued as a streamer growing cash flow slowly year after year…or they could spend billions on content. They opted to do the latter.

Losing money in and of itself is not a bad decision. In fact, executives make this decision all the time. When a company builds a new factory, that can cost billions of dollars and years to do. The company, though, makes that investment assuming that long term the additional revenue which flows to the cash flow will pay for that investment. 

(Want to know why pharma companies aren’t making more vaccine doses? Well, it’s because they don’t want to pay to build the factories that may only produce a vaccine for a year or two. That won’t pay for itself! And why the government can/should pay them to build those factories.)

This is called evaluating the “Net Present Value” of investments. This is how all business investments are (or should be) judged. Which is often called “capital budgeting”. This can be about spending dollars on infrastructure, research, new products or what not.

The core of the second decision Hastings (and Sarandos) made (and kept making from say 2015 to 2019) was how much to spend on their streaming disruption. The question was, “How much do we need to  invest in this service to succeed?” And their answer was billions. Because every time they added subscribers their stock went up. 

In essence, if Netflix does breakeven in 2021 (or for a full-year in 2022), it presents a turning point. This is the year that “investing” is over. They’ve stopped spending cash and now they can start to collect the future cash flows. To continue the factory analogy, the factory is built and ready to churn out widgets. In investment terms, the question is…

Was losing $9.7 Billion from 2011-2020 to launch a global streamer worth it?

Well, it depends on what “worth it” means.

How Much Does Netflix Need to Make Going Forward to Justify This Investment?

Be careful at immediately saying, “Well, 9.7 billion.” 

Because of the time value of money.

(Quick reminder of the time value of money:

I’ve explained the time value of money, and it can be tricky. Basically, the idea is that a dollar today is worth more than a dollar tomorrow. Because of the certainty you have the dollar in hand. Further, you can invest that dollar and generate a return. This is the basic principle of finance.

The next most basic principle of finance is that different investments have different levels of risk. If you take a dollar and put it under your mattress, you don’t get any return on investment, but you’re certain it will be there a year. If you invest it with the government, you’re still fairly certain they’ll pay you back, so you demand less of a return on your investment. That’s usually called the “risk free rate of return”. Investing with a risky start up is much more uncertain, so investors demand high levels of return. The S&P 500 is a good benchmark for the entire stock market, which is fairly reliable but can also have big swings, as we just saw in March of 2020, when it dropped 30%.)

For entertainment, I tend to use 8% because it is a nice round number and close enough for our work. Now that we know we have to take losses into account, you can see what it really cost Netflix when they invested all those billions in content (in millions):


I’m providing you four looks at this. First, I’m giving you both the cost of capital from today’s dollars, to see how much Netflix spent of shareholder dollars the last 8 or so years. But I’m also giving the 2011 dollars to show how Reed Hastings could have been thinking about it in 2011. Also, I accounted for potential cash flow Netflix could have earned at a conservative 200 million per year. By losing money, they lost that potential cash as well.

Netflix actually needs to earn $14 billion to justify the sky high investment of the last eight years. 

The trouble is that discounting continues into the future.  I just said that a dollar next year isn’t worth as much as a dollar this year. That’s even more applicable in 2030, for example. A dollar in 2030 is only worth 21% of a dollar in 2021. Here’s that rough math for those who don’t want to calculate it:

IMAGE 4 - NFLX Future discounted values

Without getting too finance-y with terminal values and what not, let’s say the reasonable goal is to pay back the investment in streaming by 2030. With the discounted cash flow, what would their potential cash flow need to look like by 2030?

IMAGE 5 - NFLX Hypothetical Breakdown

This is why I said breaking even is only the first step. To pay back their investment–and the longer you wait to pay it back, the higher the returns need to be–Netflix needs to add $500 million per year to the free cash flow, getting to $4.5 billion by 2030. 

Is that reasonable? Sure. But it’s also reasonable that Netflix could flirt with breaking even for a few years into 2022, and find that as wealthier markets are mostly tapped, new customers cost more to acquire and churn faster. In other words, streaming could be a low margin business when it comes to cash flow. If streaming is like traditional entertainment, this is reasonable.

Or you could listen to the market, who is projecting that Netflix will achieve $11 billion in FCF in 2026, five years away. In that case, Netflix is a cash flow machine. 

Here are those three scenarios over time:

IMAGE 6 - Scenarios

In other words, using some very reasonable situations, we don’t know if Netflix has validated their strategy. What we can say is that Netflix spent a lot of money for years, and now they need to make a lot in the future to justify that investment. I mean, even our breakeven scenario demands a free cash flow growth rate of 137%! That’s a lot! And assumes they get to $500 million free cash flow in 2022.

But EntStrategyGuy, the Stock Price!

The other big caveat to my entire analysis is, “Well, if you had invested in the stock in 2011, look at the huge boom in price!”

This I cannot argue with. Though, I don’t provide investing advice. While the stock price is correlated with a company’s core fundamentals, they often move in discreet ways. And sometimes the market can have exuberance that doesn’t bear on reality.

Take Netflix’s free cash flow. I just told you the market believes in 2026 Netflix will generate $11 billion in free cash flow. How can I argue against that? Well, let’s see how well the market did in 2015 predicting 2019’s free cash flow…

IMAGE 7 - 2019 FCF Estimate

Or take 2021…

IMAGE 8 - 2021 FCF

That’s right: in 2014, most analysts on Wall Street expected Netflix to earn $4 billion in free cash flow in 2021, a year Netflix is predicting they will break even. Then they kept making that mistake year after year, pushing out cash flow positivity always out another year. Until a pandemic hit. Let that sink in.

Wall Street is terrible at forecasting this company.

The best analysis of this situation–and there are a few good Netflix bull analysts out there–came this week Andrew Freedman at Hedgeye, and his financial table laying out the Netflix options put this in great context:

IMAGE 9 - Hedgeye Cases

(Sign up for his website here! He also helped me pull some of the data above.)

In other words, to justify the current Netflix stock price, their growth will need to achieve nearly 500 million subscribers at ever growing revenue per user. (Freedman uses EBITDA as a proxy for FCF, which gets to the same place.) The point is Netflix needs to hit nearly all their aggressive targets and even then the stock is only slightly higher than its current value.

The Key Question: How long does break even last?

To bring this back to the core point, in a way you could ignore all the spending of Netflix so far. Instead, just look at them as a company with $8 billion in cash, $15 billion in debt, 200 million global users, and zero cash flow in 2021.

Would you invest in that company?

The answer depends on the fundamental questions for every company: How much will they make? And how fast will that grow?

If Netflix continues breaking even through 2022 and finds that profit margins are as tight as they’ve always been in entertainment, then the growth answer is “not much”. If the growth estimates match Wall Street estimates, then the sky’s the limit. The answer is somewhere in between.

So yes, this news is big. But the game is not over. Breaking even was step one. Step two, three and four are to sustain and grow that even more. We’ll see if Netflix can do it. And the debate is very well alive to see if they can.

One Other Big Point: Did 2021 Show That Netflix Was Spending Too Much on Content?

The other fascinating question is “What drove cash flow positivity?” 

The bull case is that Netflix fundamentals drove this reality. They invested in tons of content, and all the subscriber growth justified it. Indeed, that’s a headline I saw repeated in countless articles and many entertainment newsletters.

The bear case is “covid-19”. 

Reality is somewhere in between. But it’s worth figuring out where exactly. Did Netflix achieve positive growth because of the huge Covid-19 acceleration in subscribers? Partially. Did their investment in tons of content drive that? Surely. 

But did Netflix achieve positive growth, almost by accident, because they paused all global productions? Probably! Indeed, in Q4 Netflix said they were back to full-production on their shows, and not surprisingly they were cash flow negative again. The link seems fairly clear: when Netflix spends at their current level on content, they lose money. 

How do we prove it one way or the other? We can’t, but I will point to this fun thought experiment. On the earnings call after the Q4 results were released, Netflix said that they won’t even bother forecasting subscribers in 2021. They said it’s much too difficult, and only forecast adding 6 million subscribers in Q1. 

Yet, they forecast they will break even in 2021.

This begs the question, “Huh?” 

All finance boils down to this: money you make and money you spend. If Netflix has said they can’t reliably forecast how much money they will make, how can they confidently know they will break even in 2021?

Because of what Netflix can control. Costs. Which means content costs. If Netflix is forecasting breakeven in 2021, but they have no idea how many subscribers they’ll grow by, they’re basically saying they’ll ensure they get there by right-sizing content costs to breakeven. Meaning they’ll cut costs if they need to breakeven.

The implications of this are, in fact, the exact opposite of every smart pundit saying Netflix has justified it’s content spend. If anything, 2021 showed Netflix–almost by accident!–that they were much too aggressive on making original content. Sans Coronavirus, likely Netflix loses $2 billion again in 2020, then tries to lower that in 2021 to break even. Covid-19 changed all that.

This ties to the strategic point above. Yes, Hastings and Sarandos built a global powerhouse. Did they need to lose $14 billion to do it? Maybe not.

The Christmas Chronicles Was Netflix’s Most Watched Film in the US in 2020 and Other Data Thoughts from “Who Won December”

December was a big battle in the streaming wars. The Christmas Day/end of year is becoming increasingly important to the streamers since it is the last time to grab subscribers before annual reporting. This is why the latest installment of my “Who Won the Month” series at Decider may be the most important one of 2020. 

So check it out!

To keep that article flowing, I ended up cutting a few insights/thoughts from that article that still felt good enough to share. Consider this the “DVD extras” addendum to that great piece. (Seriously, read it before you continue.) 

Other Contenders That I Didn’t Mention

The biggest drawback to a word count is having to cut a few shows from contention. Last month that mainly meant some shows from the smaller streamers. CBS All-Access released their latest Stephen King thriller The Stand. (It had a peak of 9 on Google Trends.) The challenge is a word like “stand” is fairly generic, so it just may not be picked up in the Google Trends data. However, on IMDb, its ratings are 6,600, so likely it isn’t really catching on. Showtime released Your Honor, but it didn’t really budge the popularity needle.

Apple TV+ focused on kids in the holidays, airing both A Charlie Brown Christmas and Wolfwalkers. Again, I didn’t really see the Wolfwalkers trending. (Charlie Brown is too generic.)

Caveats to IMDb Data

For the first time, I compared shows using IMDb ratings data. I both want to explain how and why I used this data source and also some other insights into last month’s results.

The “why” is because I love capturing qualitative feedback on a given show or film in addition to viewership. In particular for TV, this can be somewhat of a leading indicator to forecast if subsequent seasons of a show are going to build momentum or begin to flag. This applies to TV series as well as film franchises. Especially for franchises, actually. A big marketing campaign can result in a strong opening weekend, but if the IMDb ratings are low, then eventually the series will decay in viewership. (See Fantastic Beasts or The Hobbit series for some examples.)

As for how, I tend to use both the rating itself and the number of ratings. The number of ratings is fairly correlated with viewership overall. Thus, if you don’t have viewership itself, IMDb can act as a proxy, like Google Trends. The actual rating itself (the 1-10 numbers) doesn’t account for small but well-liked films and TV series. My approach is to make a scatter plot, and see which films are in the upper right: lots of reviews and high ratings. (If you want to pay for it—and I can’t afford it—IMDb page traffic is also a good proxy.)

Now the caveat: some folks hate using IMDb ratings because online trolls have attacked certain films.

You can see this in Wonder Woman 1984. While it has nearly as many ratings as Soul, its average rating is much, much lower. Which raises the question of whether or not Wonder Woman 1984 is being intentionally dragged by trolls online. And this is the main problem with IMDb data: some folks will intentionally drag down shows for political reasons, which skew the value of this data source. 

But I won’t throw the baby out with the bath water. Because it’s the best publicly available, qualitative data set we have.

Rotten Tomatoes and Metacritic are probably the next two biggest review sites, and their numbers are orders of magnitude smaller than IMDb. The caveat here, of course, is that larger sample sizes of biased data are still biased, meaning that doesn’t justify using IMDb. The problem is that for Rotten Tomatoes and Metacritic, their sample sizes in many cases aren’t big enough to be representative. I’ve considered using Amazon ratings, but in that case some films are available in streaming, but some are available for free and some are available for purchase. This makes ratings not apples-to-apples, and that’s before the fraud problem with Amazon ratings.  

So when I use IMDb data, I tend to accept its shortcomings and use it carefully. To start, I know IMDb tends to skew “genre” in its ratings. This means for shows like The Expanse or Wonder Woman 1984, I’d say the reviews on IMDb are relevant. Since The Expanse has done well on IMDb, that shows some genuine fan interest. For something like Bridgerton, I’m less concerned if its score is weak.

Then, I try to figure out if a given show has been dragged by potential online trolls. When they have—eg The Last Jedi, Black Panther or Captain Marvel—I just wouldn’t use those ratings. Though don’t go overboard: don’t pretend that every poorly rated film is just a victim of online trolls. Some films are bad and fans don’t like them.

For Wonder Woman 1984 specifically, while I haven’t heard of any specific campaigns, on another user review site, Rotten Tomatoes, Wonder Woman 1984 has done better than its IMDb score. This likely indicates there is some intentional downvoting, but even with that it is unlikely Wonder Woman would have been a 8.0 or higher film.

IMAGE 1 - RT vs IMDb for Wonder Woman

A score of an “8” on IMDb tends to separate the merely good from the great. Meanwhile, The Midnight Sky did poorly in both locations. So it may be widely watched, but folks didn’t really love it.

(Also, never use the Tomatometer. That has very little nuance since it simply measures “good vs bad”.)

Did Netflix Have a Good December?

Probably, but not as good as last year. If you just casually read the news, you heard a series of great Netflix reports, and you’d assume they’re crushing it again.

Fortunately, I’ve collected every Netflix datecdote over the last few years and can put those numbers in context. Here’s the last three December releases that we have datecdotes for from Netflix. (These are films released in December. I’ll look at Netflix’s entire Q4 in a future article.)

IMAGE 2 - NFLX Decembers

The best way to describe this is that Netflix’s top film and top TV show released in December both underperformed their peers who launched last year. This looks even worse in context of the growth of the service during that time frame. The key question every quarter is whether Netflix’s content can help propel growth, or merely hold subscriber counts steady. And it seems to me like Netflix held steady in December compared to 2019.

Did Disney Really Win the Month?

For the first time in December, I didn’t just declare The Mandalorian as the winner in December, I also said that Disney won the month compared to Netflix. Essentially, between Soul and The Mandalorian, Netflix didn’t have a blockbuster show that drove the same level of interest.

The counter could be: but what if you added up every new thing Netflix released? Would it pass Disney by sheer volume?

So I looked for any Netflix series that seemed to generate interest and tried to figure that out. However, even after that, Disney was still the winner:

IMAGE 3 - Google Trends Expanded Look

There is a lesson in here about content planning and “return on investment”. Essentially, Disney could match Netflix for interest with only two hit releases. Now, those two may not generate as much time on the platform as Netflix currently has (their usage is much higher), but as for keeping subscribers, Disney may be able to do that more efficiently. I say “may” because it’s not like the two pieces of content Disney made are cheap by any means. (The Mandalorian may be the most expensive show on TV until Lord of the Rings comes out.) That’s its own form of inefficiency.

This also repeats a point I constantly make about the streaming wars: the best shows aren’t a little better than other shows, but multiples better. Thus, you don’t win the streaming wars with singles and doubles, but grand slams. And in July, November and December, Disney hit a grand slam each month. And with much fewer at bats than Netflix. That is an efficient form of content spend.

November Flashback: What Can Nielsen’s Data Tell Us?

The one drawback to my “Who Won the Month” series is that Nielsen data usually isn’t ready by the time I write my initial article. (They perform better near the month they cover, so I try to write them for the last day of the month or so.) This means that we can now look back and see which calls I made in December are either confirmed or refuted by the Nielsen data. 

So let’s hold myself accountable for my calls:

– Was The Mandalorian bigger than The Queen’s Gambit? I said yes, but according to Nielsen it depends how you count. The Queen’s Gambit was able to sustain higher week to week viewing than The Mandalorian, but Mando outpaced in terms of weeks on the Nielsen top ten:

IMAGE 4 - Week by Week Nielsen Ratings

– So The Crown was big? Yeah, that’s what the Nielsen data says. However, this is partly expected because The Crown now has four seasons airing, so that’s a lot of episodes to catch up on. The limitation of Nielsen’s data is we can’t see season level viewership. (That’s right, they give us some data and I just want more!)

– Did I undersell The Christmas Chronicles? Maybe. According to Nielsen’s data through the beginning of April, The Christmas Chronicles 2 had Netflix’s biggest film launch of this year in the United States by minutes viewed through the first two weeks! (36 million hours to Extraction’s 31.6 million hours in the first two weeks.)

– Did Hulu overhype Run? I think so. Hulu went so far as to release a vague press release calling Run its best performing film launch of all time. The problem for my system is that “run” is so vague that it didn’t register on Google Trends. So I said we’d wait for the Nielsen data to make a final call. When Nielsen released its weekly ratings for Thanksgiving weekend, Run didn’t make the cut.

Nielsen 2020.11.23 copy

– What about The Flight Attendant? At first, I was tempted to say that this HBO Max drama underperformed as well, because it didn’t make the Nielsen Top Ten. Then folks on Twitter (helpfully) pointed out that Nielsen isn’t tracking HBO Max yet. So we don’t know. Though, given that they only track services with a significant volume of regular viewers, likely The Flight Attendant wouldn’t have made the Nielsen top ten either.

My Favorite Ratings Tweet of the Quarter

This comes from Michael Mulvihill, who analyzes ratings for Fox Sports:

I would add, while he’s comparing 60 Minutes viewership to The Queen’s Gambit viewing, but that’s US only numbers compared to Netflix’s global viewership.  (Correction: I initially wrote NFL instead of 60 Minutes. As I’m supposed to say, I regret the error.)

The Top Four Licensed Shows on Netflix Account for 6% of Netflix’s Viewing in the US – Visual of the Week

In 2020, Netflix lost the rights to Friends. In 2021, they lose the rights to The Office. How much do those big shows impact viewing on Netflix? 

Quantifying that via Netflix’s data is fairly hard, though, since they focus overwhelmingly on their original series, as that’s the key to “building a moat” in the eyes of shareholders. Fortunately, Nielsen is now tracking consumption in the United States. Which means we have one third party firm who can help us answer the question.

Today’s visual answers this question:

How have the top four licensed shows on Netflix done this year?

Here’s the “Data Ws” to answer how I calculated this:

Who – Streaming customers
What – Total hours viewed (Nielsen million minutes divided by 60)
What (platform) – Any service
Where – In the United States
When – From week starting March 9th to Nov 2nd 2020, minus March 23rd
When (time period) – Measured Monday to Sunday.
How (did I get it) – Nielsen provided weekly top ten.

Here’s the answer in visual form:

IMAGE 1 - Chart of Top 4

However, we need context. As in, what does this mean? Well, to start, here’s the total viewing over the 34 weeks I have data for. And you can see what a big percentage of this top ten viewing this makes up.

Screen Shot 2020-12-08 at 2.00.59 PM

To quote Shawshank, if you’ve come this far, Red, maybe you’ll go a bit further. And that is really asking this question, “Hey, EntStrategyGuy, does this matter in terms of all Netflix’s viewing? Nielsen doesn’t provide that, do they?”

No, but Netflix has!

In two different earnings reports, Netflix reported that they make up about 100 million hours of viewing per day in the US. (In the 2018 end of year report and again in 2019.) Let’s make some scenarios to cover our bases. First, we could assume Netflix has grown somewhat during Coronavirus. That’s the high case, and I’ll use Nielsen’s estimate of 44% growth from this year for that. But Netflix could have been cherry picking their 10 million hours per day number too, so I’ll use the lower estimate of 6% of all viewing Nielsen estimated in Q1. That gives us this range:

Screen Shot 2020-12-08 at 2.01.32 PM

Is 6% a lot of content to lose? I’d say yes, and we don’t know how losing Friends impacted them because we don’t have the data. The good news is Grey’s Anatomy isn’t going anywhere as long as it stays on the air. The bad news is The Office is gone this month. (I’m not sure for NCIS or Criminal Minds.)

One bonus insight: Folks may be tempted to say that the higher viewership of licensed shows happens during times when content is weak. This actually isn’t true. Netflix’s highest viewership of originals actually peaked this year in March, according to Nielsen, and licensed shows saw higher numbers during that time period. 

(Sign up for my newsletter to get all my writings and my favorite entertainment business picks from the last 2 weeks or so. Next edition goes out tomorrow.)

“The Mandalorian vs The Queen’s Gambit: Who Won November” at Decider

In what is now a recurring column, over at Decider I took a look at all the ratings data I could find to declare the streaming winner in the US for November. This one is packed with with charts, tables and data.

(If you’re curious for the older editions, here’s September and July.)

Also, I discuss the latest Nielsen streaming data in this thread:

Why Most Netflix Subscriber Charts No Longer Include the US Only Numbers – Visual of the Week

This week’s “visual of the week” is a simple one: the number of Netflix subscribers in the United States over time. (You should know the top line number from my chart last week.)

One of my goals with this series isn’t to make all brand new charts, but update some of the best visuals. Last year, one of my best articles was showing how many subscribers Netflix has had over time. The challenge? Netflix changes definitions all the time on us. Meaning making an “apples-to-apples” chart is fairly difficult. This is why most US subscriber charts start around 2012, because that’s when Netflix started separating US streaming subscribers from DVD subscribers. (Technically they provided the 2011 numbers, but for some reason most subscriber counts couldn’t find that 2011 data comparison.)

Earlier this year, Netflix changed definitions again. They combined US and Canadian subscribers to make UCAN. So going forward, we won’t see many “US only” charts since most outlets don’t publish estimates. But I do. Since US subscribers are about 90.3% of UCAN subscribers, I use that to estimate.

Here is the update for Netflix subscriber definitions in the US over time:

NFLX Subscribers by Type

And in chart form.

NFLX Subscribers Over Time

Quick Thoughts

– In other words, every different color in the chart above is when Netflix has changed definitions. Last year, my goal was to find total subscribers, including paying DVD subscribers.

– As for forecasting, in Q3 of last year, I though Netflix would end the year with about 60.1 subscribers and they ended up with 61 million streaming only. Earlier in the year, I’d estimated 60 million subscribers, and I ended up being fairly close (off by about 1.6%). (Notably, my back of the envelope calculation that the price increase was needed to offset cash flow losses hit the 61 million on the head.)

– My other big prediction is that Netflix maxes out at about 70 million total subscribers in the US. So far we’re on track for that, but the Covid-19 lockdowns threw off all the timing. Mainly because Covid-19 pulled forward a lot of subscribers. Which will make 2021 fascinating to see if Netflix continues to add US customers, or if it slows down. (Already Netflix is seeing quarterly fluctuations in the US/UCAN numbers, with three quarters less than 500K adds and one quarter losing US subscribers last year.)

– As for the end of this year, Netflix is currently at 73.1 million UCAN subscribers and my hot take is that I think they stay at about that level for the end of Q4. I could easily be wrong, but it seems safer to predict flat growth with Netflix more than it does high growth. 

– If you’re new to the Entertainment Strategy Guy, these three articles on Netflix are much deeper dives into how I gathered and calculated these Netflix numbers.

Jan 2019 “Prediction Time: Forecasting the Effect of Netflix’s Price Increase on US Subscribers”

Sep 2019 “Why I Think Netflix Will End Up with 70 Million US Subscribers: Applying Bass Diffusion To The Streaming Wars

Oct 2019 “Why Most Netflix Charts Start in 2012: A History of Netflix Subscribers”

Netflix Has as Many Subscribers as Disney+ and Prime Video Put Together In the United States – Visual of the Week

Let me tell you a pet peeve of mine. It’s folks citing how many Amazon Prime Video subscribers Amazon has. 

Because they don’t know.

What you know, or have been told once, is how many Amazon Prime subscribers there are. With Prime comes access to Prime Video. We don’t know how many members actually use that service or, more importantly, know how many value the service enough to pay for it on a recurring basis. (What a subscription is, by definition.)

But here’s what’s crazier: we don’t even know how many Amazon Prime subscribers there are by country. They could have 50 million US Prime members…or 125 million. Literally no one knows. (In fact, we haven’t gotten an update on Prime membership since January.)

This is indicative of a larger phenomenon of the “streaming wars”. The streamers have barely told us how well they are doing. By my estimates, only 4 of the 12 biggest streamers have shared actual US subscriber numbers! (Hulu, ESPN+, HBO Max and Starz)

That’s right, due to non-disclosure, global-only numbers, or definitional craziness, we really can’t compare the streamers to each other in the United States.

Well no more!

I’ve decided to fix this glaring mistake. What I’m going to do is provide the EntStrategyGuy Definitive Estimate for all the major streamers US subscriber base. Today, I’ll provide my table, chart and some notes, then tomorrow I’ll provide the longer, gory details. First, here’s the chart:

Chart - US Paid Streaming SubscribersAnd the table, which I’ll explain tomorrow:

Screen Shot 2020-11-18 at 9.03.01 AM

About That Headline

If the internet weren’t a cesspool of clickbait, I could have just explained what this article is, “My estimate of US subscribers for the streamers.” But that doesn’t get the clicks. A flashy headline on Netflix? That does.

Tomorrow, like I will say multiple times, is where I’ll really provide insights into this process and data. For now, though, if you have one takeaway, it should be that the streaming wars are messy. They are filled with nuance. The more that someone online pushes a simplistic narrative (Netflix has already won; Disney+ will kill Netflix; TV is dead) the less you should listen. There are no simple narratives.

So my headline is 100% true, and building this chart makes that clear. When it comes to one single streamer in the United States, Netflix is about twice as far ahead as its nearest competitors. Really, they are in the first tier by themselves. Then there is a second tier of services with about 35 million subscribers (Disney+, Hulu, HBO Max and Prime Video). Then a third tier of folks trying to break into that second tier (Apple, Peacock, Starz, CBS, Showtime, maybe AMC+). 

Yet, this look is in many ways a backwards looking view. The three oldest services happen to be the three biggest. The difficulty is forecasting what comes next. If we’re looking at growth, Netflix at the top was flat last quarter and down earlier in the year. And likely would have stayed that way all year in America except for Covid. Meanwhile, can the new streamers add subscribers? I think they can.

At least now, we/I have a common fact set to evaluate the United States performance of the streamers.

Quick FAQs

– What about global? I’m just focusing on the United States since many of these streamers are US-only. And we have the best data for this country. As the streaming wars continue, though, I’ll do a similar look for worldwide. (Though comparing global numbers to US only numbers is not a good method to do that.)

– How did you get that Amazon number? It’s an estimate of an estimate of an estimate, which makes it a guess. I’ll explain tomorrow.

– Why didn’t “smaller streamer TBD” make the list? I set the cut off at roughly 2 million subscribers. Anything smaller would have made the chart difficult to read. Again, I’ll explain my rules tomorrow.

– What if you disagree? Well, tomorrow I’ll explain how I calculated each one, so if you want to adjust the estimates you can. That will allow you to disagree, but within the right zone of possible answers.

– [From Corporate PR] You got our numbers all wrong! One, if you don’t put them out, then no I didn’t. If any company wants to correct my math, send me three years of financial data and I’ll happily provide an exclusive update.

(This is the first article in a three part series estimating how many US paid streaming subscribers there are in the US. Read about how I calculated the numbers here or here.)

The Decay is Real: Streaming Films on Netflix (and others) Lose Viewership Very Quickly – Visual of the Week

In December of 2018, Netflix let loose with their first datecdote™. They told us this…

But they went further! By their earnings report, they started telling us how many folks were watching their films in the first 28 days. Including an updated number for Bird Box of 80 millions subscribers watching 70%. Which allowed me to draw this conclusion:

IMAGE 1 - Film Decay Bird Box

As I wrote at the time, “the decay is real!”

Specifically, films that premiere on Netflix tend to have a significant chunk of their viewership in the first week or weekend. This is a binge-release wide phenomenon. Yet I had trouble proving the case. The other main piece of data I use is Google Trends data. But Google Trends isn’t viewership, just interest. I needed another data source (or leak) to prove it.

(Prove it to you, by the way. Not me. I know it’s true from personal experience at a major streamer. But non-disclosure agreements mean I can’t use that data.)

The decay of films has direct ramifications on the streaming wars. The steeper a film decays, the harder it is to monetize long term. So knowing how shows and films perform over time is important for the streaming wars. To show just one example, my Mulan analysis relied on forecasting its decay over time.

So I had a pretty strong hypothesis but couldn’t prove it beyond one example. Until today!

See Nielsen has been releasing weekly top ten lists of the most streamed shows. By total minutes viewed. They provided my their data going back to April of 2020. What I can do now is analyze movie performance to see if my hypothesis bears out. And it does. 

But let’s start with what this data is. I complain bitterly that most articles don’t lay this out, so here you go.

Who – Streaming customers
What – Total hours viewed (Nielsen provides million minutes and I divide by 60)
What (platform) – Any service
Where – In the United States
When – From March 30th to October 18th 2020
When (time period) – Measured Monday to Sunday.
How (did I get it) – Nielsen provided.

This data set ended up being 29 weeks of data, or 290 data points. Separating out the films gave me 17 unique films that ended up on the streaming top ten, 16 Netflix and one Disney. Of the 17 films, only six had two weeks of data. So I plotted the decay and got this:

IMAGE 2 - Total per WeekHypothesis failed! Look at Extraction or Old Guard. They only decayed at roughly the rate of 28% and 20% respectively. 

Ah, but apples-to-apples, am I right? Nielsen starts their data on Mondays. And not all Netflix films were released on the same day of the week. Historically, Netflix released big films on Fridays, but started moving some films to Wednesday. Like Enola Holmes. So let’s account for this and change our metric to hours per day (millions):

IMAGE 3 - Per WEekThere you go! See, the decay is real! (69 and 65% decay for Extraction and The Old Guard.)

But we can go one final step further. See, no Netflix film made it in the top ten for three weeks in a row. (With the caveat that we won’t know Hubie Halloween results until next week. Maybe it breaks the trend due to its theme.) This means we know that at the very least the lowest rated film in the top ten is the ceiling for our five films decay. That gives us this chart:

IMAGE 4 - Per WEek with with 3To iterate, the week 3 numbers is the maximum number of hours per day a film could have received based on the number 10 film in Nielsen’s streaming rates. The actual number could be even lower. So I’d say Extraction, The Old Guard and Project Power (all Friday releases) are the best look at what decay for a given title looks on Netflix week-to-week. (I would bet lots of money Enola Holmes and The Wrong Missy lost viewership into week 3.)

In total, this makes 9 films that show this sharp decay. The six above, plus Bird Box (see opening) and The Irishman and Murder Mystery, which are the only two other films that Netflix confirmed the opening weekend and 28 day totals. (Murder Mystery had 45 million subscribers opening weeekend and 73 million at 28 days, at 70% completion. Irishman had 26 million opening week at 70% completion into 47 million 28 days.)

Now that I have my film data set cleaned up, there are a lot more questions to answer. What type of films made the top ten list? What does this say about Netflix’s strategy? What about the correlation of US Nielsen minutes viewed to Netflix global 2 minute datecdotes? What films made Nielsen’s list but not Netflix’s datecdote list? Those are all great questions, but will come in future articles. 

Thanks to Nielsen for providing the data. If you’re an analytics company that wants to give me data, send me an email.

(By the way, if you wanted to know the Google Trends look of those films, here you go:

IMAGE 5 - GTrends

Read My Latest “Why Did Netflix Cancel ‘Away’? (Hint: The Company’s Going Through A Midlife Crisis)”

It’s fairly clear Netflix is cancelling more shows sooner than they have in year’s past. The latest victim is the space epic Away. This move is more than a streamer cancelling an expensive show that underperformed, it shows that Netflix is embracing (some) cost discipline as it enters its third decade.

Read about that at Decider. This one is short, but it packs in a lot of biz thoughts.