Wednesday January 24, 2018

Netflix results: Revenue climbs, movie content spend to grow, international profit surge

“We had a beautiful Q4” is how Netflix CEO Reed Hastings described the fourth quarter 2017 results in his quarterly shareholder letter.

His highlights were Netflix streaming revenue climbed 36% to over US$11 billion, it added 24 million new memberships (compared to 19m in 2016), achieved for the first time a full-year positive international contribution profit, and more than doubled global operating income.

Q4 highlights

  • In Q4, Netflix registered global net adds of 8.3m, the highest quarter in its history and up 18% vs last year’s record 7.05m net adds. This exceeded the 6.3m forecast due primarily to stronger than expected acquisition fuelled by the original content slate and the ongoing global adoption of internet entertainment.
  • In the US, memberships rose by 2.0m (vs forecast of 1.25m) bringing total FY17 net adds to 5.3m.
  • Internationally, Netflix added 6.36m memberships (compared with guidance of 5.05m), a new record for quarterly net adds for this segment. International revenue and ASP grew 59% and 12% year over year, respectively.

Netflix content

The company believes the big investments in content are paying off. In 2017, average streaming hours per membership grew by 9% year-over-year. With greater than expected member growth (resulting in more revenue), Netflix now plans to spend $7.5b-$8.0b on content on a P&L basis in 2018.

“Big hits like 13 Reasons WhyStranger Things and Bright result from a combination of great content and great marketing. We’re taking marketing spend up a little faster than revenue for this year (from about $1.3b to approximately $2b) because our testing results indicate this is wise. We want great content, and we want the budget to make the hits we have really big, to drive our membership growth. We’ll grow our technology & development investment to roughly $1.3b in 2018.”

With Netflix not indicating internal data about its most-watched series, it did comment: “It’s amazing to think that in only five years since launching our first original series, Netflix had three of the top five most-searched TV shows globally for the second year in a row.”

Netflix also indicated it would be increasing investment in big-budget movies with marquee stars:

“Our largest investment in original films to date, Bright, a fantasy action movie starring Will Smith, was a major success and drove a notable lift in acquisition. In its first month, Bright has become one of our most-viewed original titles ever. We’re thrilled with this performance and are planning a sequel as well as additional investment in original films.

“We are increasingly self-producing our original content. As part of this initiative, in Q4 we signed overall deals with Stranger Things producer Shawn Levy and Orange Is The New Black and Glow creator Jenji Kohan. Our goal is to work directly with the best talent to bring amazing stories to our members all over the world.”

The bottom line though is the company will continue to lose money, predicting free cash flow in calendar 2018 could be between negative $3b-$4b.

The company also noted a loss of $39m from projects not going forward, and costs associated with cutting ties with Kevin Spacey.

The Checkout’s Julian Morrow: ‘We’ve kept a lot of ABC lawyers in therapy’

Satirical consumer affairs show The Checkout is coming back to the ABC with a new look and new segments. And for the first time since its inception in 2013, it has a new time slot too – Tuesdays, 8pm.

“Viewing habits have changed a lot with videos being watched on many different screens. But the one thing that hasn’t changed is consumers being ripped off,” The Checkout EP and presenter Julian Morrow told Mediaweek a week out from the premiere of the sixth season. Morrow is also a member of the comedy group The Chaser, who have had a self-titled TV show on the ABC.

The past five seasons of The Checkout have aired on Thursday nights, which has proven to be good for the series with it consistently securing good audience numbers. Talking about the change of time slots, Morrow said he did not know how it would impact the number of viewers watching it on TV. “Only time will tell.”

One of the new segments coming to the show is, What To Reject When You Are Expecting. This puts presenter Zoe Norton Lodge’s pregnancy journey in the spotlight. “We thought it would be a good opportunity to take a consumer’s look at the products that get marketed to women who are expecting.”

This season, Morrow will continue to present the F.U. Tube segment and will appear as an actor in other stories. “I appear as the disrespectful butt of their jokes,” he said [Laughs]. “I don’t have my own standalone segment. Between executive producing the show and taking the overall editorial responsibility for it, there’s enough for me to do. I have my fingerprints all over it.”

In his life before The Chaser, Morrow used to work as an employment lawyer. The first season of The Chaser on ABC, which was an election special, came out in 2001.

“Even though I didn’t work in the area of consumer law, it was always of interest to me. So I take an overarching interest in all the stories that we present on The Checkout in terms of looking at what rights the consumers have and how we can be punchy as possible when it comes to calling people out.”

This, Morrow pointed out, involved the production team dealing a lot with ABC’s legal department.

“Between my colleagues and me at The Chaser, we have kept a lot of ABC lawyers in work and therapy over the years,” he joked. “We have always tried to have a robust attitude behind The Chaser and The Checkout,and that means pushing the boundaries of what you can say and do.”

Continued at mediaweek.com.au.

Week 4 TV, 2018: Tuesday
TUESDAY METRO
ABC Seven Nine Ten SBS
ABC 9.4% 7 26.1% 9 15.6% TEN 14.2% SBS One 4.2%
ABC 2 2.6% 7TWO 3.4% GO! 3.8% ONE 4.3% VICELAND 1.1%
ABC ME 0.7% 7mate 3.4% GEM 3.3% ELEVEN 2.5% Food Net 1.1%
NEWS 24 1.3% 7flix 0.9% 9Life 1.9% NITV 0.2%
TOTAL 14.0% 33.7% 24.7% 21.0% 6.6%
TUESDAY REGIONAL
ABC Seven Affiliates Nine Affiliates Ten Affiliates SBS
ABC 8.4% 7 20.7% 9 14.6% WIN 15.4% SBS One 3.8%
ABC 2 3.6% 7TWO 4.4% GO! 4.7% ONE 4.2% VICELAND 1.0%
ABC ME 1.2% 7mate 3.7% GEM 6.3% ELEVEN 2.8% Food Net 0.8%
NEWS 24 1.1% 7flix 1.2% 9Life 1.8% NITV 0.3%
TOTAL 14.3% 30.0% 27.4% 22.4% 5.9%
TUESDAY METRO ALL TV
FTA STV
87.4% 12.6%

Shares all people, 6pm-midnight, Overnight (Live and AsLive), Audience numbers FTA metro, Sub TV national

Source: OzTAM and Regional TAM 2018. The Data may not be reproduced, published or communicated (electronically or in hard copy) without the prior written consent of OzTAM

Tuesday fta
  1. Seven News Seven 931,000
  2. Nine News Nine 930,000
  3. Nine News 6:30 Nine 912,000
  4. Seven News / Today Tonight Seven 864,000
  5. Seven’s Tennis: 2018 Australian Open-Night 9 Seven 824,000
  6. A Current Affair Nine 767,000
  7. Cricket: BBL Game 36 – Session 1 Ten 642,000
  8. ABC News ABC 620,000
  9. Cricket: BBL Game 36 – Session 2 Ten 607,000
  10. Hot Seat Nine 520,000
  11. 7.30 ABC 503,000
  12. Ten Eyewitness News First At Five Ten 476,000
  13. The Big Bang Theory (R) Nine 469,000
  14. The Project 7pm Ten 440,000
  15. The Big Bang Theory (R) E2 Nine 434,000
  16. Seven’s Tennis: 2018 Australian Open-Night 9 – Late Seven 406,000
  17. How To Stay Young ABC 370,000
  18. We’re The Millers Nine 346,000
  19. Family Feud Ten 329,000
  20. The Project 6.30pm Ten 313,000
Demo top fives

16-39 Top 5

  1. Seven’s Tennis: 2018 Australian Open-Night 9 Seven 208,000
  2. Cricket: BBL Game 36 – Session 1 Ten 156,000
  3. Cricket: BBL Game 36 – Session 2 Ten 150,000
  4. Seven News Seven 116,000
  5. Seven News / Today Tonight Seven 113,000

18-49 Top 5

  1. Seven’s Tennis: 2018 Australian Open-Night 9 Seven 297,000
  2. Cricket: BBL Game 36 – Session 1 Ten 262,000
  3. Cricket: BBL Game 36 – Session 2 Ten 262,000
  4. Nine News 6:30 Nine 240,000
  5. Nine News Nine 209,000

25-54 Top 5

  1. Nine News 6:30 Nine 306,000
  2. Seven’s Tennis: 2018 Australian Open-Night 9 Seven 300,000
  3. Nine News Nine 284,000
  4. Cricket: BBL Game 36 – Session 2 Ten 281,000
  5. Cricket: BBL Game 36 – Session 1 Ten 277,000
Tuesday multichannel
  1. Octonauts ABC2 178,000
  2. Peter Rabbit ABC2 172,000
  3. Dot. ABC2 167,000
  4. Go Jetters ABC2 166,000
  5. Andy’s Prehistoric Adventures ABC2 157,000
  6. Ben And Holly’s Little Kingdom ABC2 153,000
  7. Homicide: Hours To Kill ONE 152,000
  8. Noddy Toyland Detective-AM ABC2 150,000
  9. PJ Masks-AM ABC2 145,000
  10. Shaun The Sheep ABC2 144,000
  11. Peppa Pig-AM ABC2 143,000
  12. The Justine Clarke Show!-AM ABC2 143,000
  13. New Tricks 9Gem 142,000
  14. Midsomer Murder 9Gem 142,000
  15. 48 Hours ONE 141,000
  16. Hey Duggee-PM ABC2 138,000
  17. American Ninja Warrior 9GO! 136,000
  18. Inspector Morse-PM 7TWO 133,000
  19. Ben And Holly’s Little Kingdom-AM ABC2 131,000
  20. 48 Hours: NCIS (R) ONE 130,000
Tuesday subscription tv
  1. Murdoch Mysteries 13TH STREET 52,000
  2. Family Guy FOX8 47,000
  3. Peppa Pig Nick Jr. 45,000
  4. Chicago P.D. UNIVERSAL 45,000
  5. Family Guy FOX8 45,000
  6. Paw Patrol Nick Jr. 42,000
  7. Shimmer And Shine Nick Jr. 41,000
  8. Peppa Pig Nick Jr. 40,000
  9. Peppa Pig Nick Jr. 39,000
  10. American Dad! FOX8 39,000
  11. Supergirl FOX8 38,000
  12. Paw Patrol Nick Jr. 38,000
  13. Paw Patrol Nick Jr. 37,000
  14. Live: WWE Raw FOX8 37,000
  15. Fresh Beat Band Of Spies Nick Jr. 36,000
  16. Paul Murray Live SKY NEWS LIVE 36,000
  17. Vampirina Disney Junior 35,000
  18. Doc McStuffins Disney Junior 34,000
  19. Paw Patrol Nick Jr. 34,000
  20. Sofia The First Disney Junior 33,000

Media News Roundup WEDNESDAY

Investment

The Australian executive who some shareholders hope will be appointed CEO of Domain Holdings Australia, Greg Ellis, is committed to his current job in Germany but will help develop the real-estate marketing business, which was rocked Monday by the resignation of its chief executive, a spokesman for Ellis said, report The AFR’s Aaron Patrick and James Thomson.

“Greg Ellis is fully committed to Scout24,” a spokesman for the company said from Berlin. “Irrespective of this he will contribute his expertise to the further development of the Domain Group in his role as a member of their supervisory board.”

[Read the original]

Netflix has reported it grew streaming revenue 36% to over US$11 billion in calendar year 2017, added 24 million new memberships (compared to 19m in 2016), achieved for the first time a full-year positive international contribution profit, and more than doubled global operating income.

Internationally, Netflix added added 6.36m memberships (compared with guidance of 5.05m) in Q4, a new record for quarterly net adds for this segment.

With contribution profit of $227m in 2017 (4.5% contribution margin), the international segment delivered its first full year of positive contribution profit in Netflix history.

Netflix’s largest investment in original films to date, Bright, a fantasy action movie starring Will Smith, was labelled a major success and drove a notable lift in subscriber acquisition. In its first month, Netflix reported Bright has become one of its most-viewed original titles ever.

“We’re thrilled with this performance and are planning a sequel as well as additional investment in original films,” said Netflix in a statement.

See more below.

Regulation

Britain’s competition regulator said Rupert Murdoch buying all of Sky was not in the public interest because it would give the media mogul too much influence, but set out possible remedies that could allow the $15 billion deal to go ahead, reports Reuters.

The initial ruling complicates a plan by Walt Disney Co to buy many of Murdoch’s assets, including the pan-European satellite business Sky. Disney had hoped that Murdoch would have taken full control of Sky by the time the US group completed its takeover.

But Britain’s Competition and Markets Authority said on Tuesday that the deal as proposed went against the public interest because it would give the Murdoch family too much control over the provision of news.

The CMA said possible ways to resolve its concerns about Murdoch’s influence in Britain could include spinning off or divesting Sky News, or insulating Sky News from Fox’s influence. A third option is to block the deal outright.

[Read the original]

Disney’s acquisition of parts of 21st Century Fox could make it easier for Rupert Murdoch’s family to buy the portion of European broadcaster Sky that it does not already own, it has emerged, reports CNBC.

If Disney does go ahead and buy parts of Fox, including its movie studios, TV networks and streaming service Hulu, as well as Fox’s 39.1% of Sky, then there would be no such concerns, the regulator said.

[Read the original]

News Brands

A trade group representing Fairfax Media, News Corp Australia and Seven West Media’s West Australian Newspapers has thrown its support behind Rupert Murdoch’s call for Facebook to start paying publishers for written articles and video content, reports The Australian’s Darren Davidson.

Murdoch has turned up the pressure on Facebook chief executive Mark Zuckerberg to make good on a promise to stamp out fake news and promote quality journalism by proposing that the social network giant adopt a new model, much like a cable distributor pays television channels for programming.

Peter Miller, chief executive of NewsMediaWorks, described the initiative as a “cracking idea”, saying he was “confident there would be support among our members”.

“Carriage fees for trusted content would seem to describe a ‘new financial model’, but actually paying a reasonable fee for valuable content is not a new concept at all,” Miller said.

[Read the original]

December 2017 digital news rankings released this week by Nielsen revealed that news.com.au (5.6 million) remained the top news entity and grew 7% when compared with prior year.

In second place were ABC News websites (4.5m, +8%), which moved up from third when compared to December 2016, switching places with nine.com.au (4.4m, +3%), which secured the third spot. Smh.com.au (3.8m, +4%) remained in fourth place.

In comparison with December 2016, there were changes in the ranking order for the next six news entity rankings. Yahoo7 News websites (3.0m, +21%) moved from seventh to fifth place, followed by Herald Sun(2.4m, +9%), which jumped from ninth place to sixth place.

Daily Mail Australia (2.3m, -14%) which had previously held fifth place in December 2016, moved back to seventh place. Next was The Guardian (2.2m, -13%), which dropped from sixth to eighth, and BBC (2.2m, -10%), which moved into ninth place from eighth place. Lastly was MSN News (2.1m, +6%), which moved into the top 10.

Media People

QMS Media has announced changes to the structure of the group’s senior executive team, with the appointment of divisional leaders across its Australian media and production businesses.


John O’Neill, currently chief sales officer, has been appointed to the role of CEO of QMS Australia. O’Neill has over 20 years’ experience in the outdoor media industry, developing and leading sales teams at Eye Corp, Media Puzzle and oOh!media. In his new role as CEO, O’Neill will be responsible for leading and managing the Australian media business through the implementation of the next evolution of QMS’s multiplatform engagement strategy across digital, outdoor and sport media.

Nathan Sable, currently managing director of QMS’s production company Omnigraphics, will become CEO of QMS production and assume oversight of all QMS’ Australian production and logistics businesses, including Omnigraphics, MMT and BMG. Sable has years of experience across the print production industry, and he will be responsible for driving operational efficiencies across the Group.

Reporting to the group CEO Barclay Nettlefold, O’Neill and Sable will assume immediate operational responsibility of each of the businesses and enable the group CEO to dedicate a greater degree of focus on the strategic direction and future growth of the QMS Media Group as a whole including international opportunities.

Photo: John O’Neill [L] and Nathan Sable [R]

oOh!media has appointed Sheila Lines chief financial officer, effective 1 March 2018.

Lines has extensive experience in public practice and in listed companies within technology, banking, telecommunications, payments and personal transport sectors.

She was most recently the CFO of Cabcharge Limited until December 2017 and previously held the roles of CFO at BPAY Australia, independent non-executive director at the Bank of NT Butterfield & Son and CEO at Key Tech in Bermuda.

oOh!media CEO Brendon Cook said “We are very pleased to have secured a high calibre and accomplished executive in Shelia Lines as the company’s new CFO. In addition to her 25 years’ finance leadership, Sheila has in-depth experience in technology and data infrastructure and we are looking forward to Shelia bringing that expertise to oOh!media as part of our executive leadership team.”

Radio

ARN has opened its wallet for a new marketing campaign for KIIS 101.1 in Melbourne.

The broadcaster indicated it is one of the largest multichannel campaigns it has ever done in the market, designed to build familiarity for new breakfast hosts Jason “Jase” Hawkins and Polly “PJ” Harding and their content.

Both broadcasters are new to the Melbourne market and both ARN and the hosts are undertaking a do-or-die effort to lift the station, which has underperformed in the market for some time.

ARN’s chief marketing officer Anthony Xydis said the agency JOY was engaged to create the campaign in conjunction with ARN’s marketing department content teams and Jase & PJ themselves.

“We’re excited to launch our latest marketing campaign in Melbourne for KIIS 101.1. It’s one of the largest multichannel campaigns that ARN has put in market and is designed to build familiarity for Jase & PJ and their unique brand of ‘always awkward’ content,” Xydis said.

“The TV campaign, developed with our creative agency JOY, the ARN marketing and content teams and both Jase & PJ, sees Jase & PJ caught in awkward lift situations during their first days at KIIS with an awkward selfie, a loud burp and the discovery of bird poo in PJ’s hair all reflecting the fun, unique and often sibling-like relationship that Jase & PJ share.

“The campaign features a multiplatform outdoor campaign across large format, street furniture and transit, and is complemented by social and digital.”

TV Demand charts

Just a week after we questioned how long Game Of Thrones could rule the Top 10 Overall TV Demand charts, as measured by Parrot Analytics, the drama has been thrown from top spot.

With no new episodes in 2018, The Walking Dead is the new champ in Australia, while Vikings is top of that chart in New Zealand.

Entering the Overall TV chart in Australia are Lucifer and Grey’s AnatomyStar Trek: Discovery has re-entered the New Zealand chart.

As Netflix noted in its results this week, the streaming space is becoming more competitive, yet their original series are doing good business judging by the Digital Original charts, which measure audience demand via online and social.

Netflix has five series in both territories with Stranger Things seemingly in no danger of losing top spot.

Netflix series Travelers is back on the New Zealand Digital Originals top 10, while in Australia Grace And Frankie and 13 Reasons Why are back in the top 10.

Sports Media

SEN is the only place where sports fans will hear every game of AFLX live, the radio station confirmed this week.

AFLX is a seven-a-side three-day competition often compared to what T20 is for cricket.

AFLX kicks off on February 15 in Adelaide when Adelaide, Port Adelaide, Collingwood, West Coast, Fremantle and Geelong play at Hindmarsh Stadium, with the other matches being played at Etihad Stadium (Melbourne, North Melbourne, St Kilda, Carlton, Hawthorn and Essendon) the following night and at Allianz Stadium (Sydney, GWS Giants, Brisbane, Western Bulldogs, Richmond and Gold Coast) on the Saturday.

SEN breakfast co-host Tim Watson said that he is looking forward to seeing the reaction to the high-paced game.

“All those people now that may be naysayers about this, if they tune in and watch this game they will be the first to call in and say they were wrong,” he said on SEN Breakfast.

On the first episode of the Sounding Board podcast for 2017, Pacific Star MD-elect Craig Hutchison said there would be some big names signing with the station who would appear on Gerard Whateley‘s new morning show.

The first of those big names dropped this morning.

AFLW star Daisy Pearce headlines a list of sporting talent that also includes rising media star Kane Cornes, five-time premiership star Dermott Brereton, expert analyst David King, 300-game champions Nick Dal Santo and Robert Murphy, three-time premiership player Terry Wallace and Brownlow medallist Adam Cooney.

During 2017 Pearce became Triple M Melbourne’s first female footy caller.

Pearce will play a pivotal role with the station. She’ll appear on Gerard Whateley’s new show Whateley, breakfast with Garry Lyon and Tim Watson and develop her own signature women’s sport show. Pearce will also provide expert analysis on 1116 SEN footy and AFL Nation around the country.

Craig Hutchison said in a release accompanying the news:

“We are thrilled with the calibre and integrity of the talent we’ve assembled that will drive 1116 SEN into its new era.

“We’ve secured sport’s biggest names and influencers and we aren’t done yet with further announcements still to come regarding Gerard’s show, which launches on Monday.

“There will be more diversity, opinion, and something for all sports fans in the new 1116 SEN world.

“We’ll call more live sport, take you places you’ve always dreamed of going, and connect you with your heroes all over the world.

“1116 SEN in 2018 means business, and we’ve got the ensemble cast in place to start an amazing ride.”

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