Too Much TV: Your TV Talking Points For Thursday, October 17th, 2024

Some thoughts about Netflix's customer acquisition costs

Here's everything you need to know about the world of television for Thursday, October 17th, 2024:

PRODUCTION NOTES
I've added a large number of new free subscribers in the past couple of weeks. So it seems like a good time to remind everyone that there is a paid subscription option available. I know that there are a lot of newsletters asking for your time and money. But if you are so inclined, I would really appreciate the financial support. As you might imagine, writing five of these a week is a lot of work and your support makes it possible.

If you aren't ready to make that leap, I'd also like to ask if you'd forward this email to anyone you think might find it interesting. Or like or restack the newsletter, which helps tell Substack this is a newsletter they should be recommending more often. It's a cluttered media world right now and I appreciate all the help, no matter what it might be.

NETFLIX'S QUARTERLY EARNINGS
I'm not going to recap the Netflix quarterly numbers at this point of the day. I suspect if you're interested, you have at least seen the highlights by now.

I did want to touch on a couple of things I found interesting.

According to the investor letter, Netflix users watch an average of two hours a day of the service and that number keep growing. Which tells us a couple of things. When the average user is regularly watching that much of a service, they'll drop a lot of other streaming options before they drop Netflix. That is incredibly valuable when it comes to subscriber retention and it's likely a primary reason why Netflix's churn rate continues to be lower than any of its major competitors.

Netflix's customer acquisition costs (CAC) are a bit harder to figure out. In the streaming industry, at least part of content spend can be attributed primarily as a way to acquire new customers. But there is no way from the outside to figure out how Netflix slices that pie. And it's even more complicated by the fact that Netflix has a global business and that means different territories have different spending and content priorities.

One way to get a sense of how CAC costs are headed is to look at marketing costs (which also includes PR, etc) and compare that to quarterly spend to how many new subscribers were added. Granted, that is a very rough metric and it is also complicated by the different challenges in different territories. And it's also tough to determine how much of any marketing increase is just attributable to the fact that the overall subscriber base is larger quarter-over-quarter.

But as an FYI, if you make that comparison, Netflix's marketing costs per new subscriber has risen in the third quarter for each of the last three years:

2024 Q3: $126 per new subscriber
2023 Q3: $110 per new subscriber
2022 Q3: $96 per new subscriber

So that points to Netflix's average CAC slowly increasing, which makes sense given that several of its bigger markets are likely hitting a ceiling for possible new subscribers. The good news for Netflix is that at least for now, they can afford it.

One last point. A lot of industry critics point to Netflix's stock price as being "insane," especially given the much lower prices of Disney and the sad sack Warner Bros Discovery. They point to those media company's diverse IP and holdings and argue those assets are undervalued. And there's a lot of truth to that. But that diversity also makes for a much more challenging way forward to grow revenue and not make any major strategic mistakes.

Netflix is being rewarded by Wall Street for being the leader in a business that even competitors will admit is the future of entertainment. It is making money, it's managed a difficult executive transition and continues to expand globally in a way that will only increase its revenue and reach. It's not perfect, but for investor purposes it's as close to a sure bet as you can get. The calculation by investors is that even though Netflix's stock price might have some volatility at times, it's now a market leader and that makes it worth it. That high stock price doesn't necessarily reflect Netflix's worth, but its stability and Wall Street’s belief in its leadership.

READER FEEDBACK
In yesterday's newsletter I asked whether any of you were paying attention to the fall broadcast TV primetime premiere week/month, and I received a lot of great feedback. Here is some of it.

"tbh, I don't think I've watched broadcast TV aside from live sports in maybe 4-5 years. I'll usually catch up with some of the shows on Peacock or Paramount+. But I can't tell you the last time I watched a show live when it aired."

--Debbie S.

"New network tv season? I don't pay close attention to network tv. Survivor and the Amazing Race are the only network tv shows we watch anymore. I subscribe to Netflix, Amazon, Hulu Live, ESPN, Disney, Peacock, and Paramount Plus. Most of these choices are because I'm a soccer fan. I wouldn't pay for Amazon except it's free with a Prime subscription. I watch the streamers when not watching soccer but YouTube through our Roku is what is on the most (my wife's choice). I look at Netflix first and bounce around a lot for series and movies. "

--Joe L.

"I’m not watching nearly as much broadcast TV these days (and when I do, it’s on their streamers/Hulu/etc.). Looks like I’ve only got 4 on my radar this fall: “High Potential,” “Doctor Odyssey,” “Happy’s Place” and “Matlock.”

--Chip C.

"My dad watches a lot of live broadcast TV and when I come to visit, I'll sit with him and watch. The thing I notice most is the number of ads on primetime television. I'm not against commercials, I have streaming packages with ads and I even switched down to Netflix with ads. But the networks seem to have more ads than anyone and I just don't have the patience for that amount anymore."

--Cynthia K.

You asked so, here: I recently found your newsletter and I'm addicted. I read every word every day. I knit and watch TV a good bit of every day (I'm 75). I no longer have a subscription to a multi channel service. But I have no-ad subscriptions to about 7 or 8 different streams at any one time. Once a day, I catch Jeopardy on YouTube and also, usually, network evening news there. The down side of my system is just keeping track (also UI roulette - my poor remote feels battered) of what's on what, when and where am I episode wise. That's how I found you - your list of tonight and tomorrow. BUT it's your commentary that now has me hooked. For my money (which, i'll admit, isn't worth squat yet), your content is spot on and very much appreciated. 

--Susan D.

ODDS AND SODS
* This is a really good overview of some of the challenges facing the FAST ad business, with some enlightening comments from executives at NBCU, Scripps and CBS.

* Apple TV+ has picked up a third season of Shrinking.

* The Food Network has announced its November holiday premiere schedule.

* OWN will premiere three original holiday movies in December.

* Adult Swim has greenlit seasons eleven and twelve of Rick and Morty. As a bit of perspective, season eight of the show isn't set to debut until 2025.

* Apple TV+ announced today that it has ordered a three-episode documentary that will highlight "all of the most powerful moments of the 2024 World Series." Although by "ordered," what Apple TV+ really means is that they publicly revealed its existence today, since the series is already in production. BTW, the project is produced in partnership with MLB and Imagine Documentaries (Apple’s The Dynasty: New England Patriots and The Super Models), R.J. Cutler’s This Machine (Apple TV's Billie Eilish: The World’s a Little Blurry, Dear…, Martha, Elton John: Never Too Late) and five-time World Series Champion, executive producer Derek Jeter, alongside his production company, Cap 2 Productions. 

* FX’s new documentary The New York Times Presents: Weight of the World follows "three people on their own GLP-1 journeys and explores how decades of diet culture and society's relentless pursuit of thinness paved the way for their rise." It premieres Friday, November 22nd on FX.

* Project Runway has been off the air since last year, but it is returning, albeit on a new network with a different on-air cast. The show will move to Freeform, with host and mentor Christian Siriano and judges Nina Garcia, fashion designer Brandon Maxwell and journalist Elaine Welteroth all exiting the show.

* Season two of Mayfair Witches is premiering January 5th, 2025 on AMC.

WHAT'S NEW TONIGHT AND TOMORROW

THURSDAY, OCTOBER 17TH:
* Brothers (Prime Video)
* Elsbeth Season Two Premiere (CBS)
* Georgie & Mandy's First Marriage Series Premiere (CBS)
* Ghosts Season Four Premiere (CBS)
* Gundam: Requiem For Vengeance Series Premiere (Netflix)
* Jurassic World: Chaos Theory Season Premiere (Netflix)
* Louder: The Soundtrack Of Change (Max)
* Love Stuck (Prime Video)
* My Professor's Deadly Secret (LMN)
* Outside (Netflix)
* Passenger (Britbox)
* Shane Smith Has Questions Series Premiere (Vice)
* Star Trek: Lower Decks Season Premiere (Paramount+)
* Superman & Lois Season Premiere (The CW) 
* The Devil's Climb (NatGeo)
* The Lincoln Lawyer Season Three Premiere (Netflix)
* The Midwich Cuckoos: Village Of The Damned (Acorn TV)
* The Pradeeps Of Pittsburgh Series Premiere (Prime Video) 
* The Shadow Strays (Netflix)
* Wicked City Season Premiere (ALLBLK)

FRIDAY, OCTOBER 18TH:
* Best Bite Wins Series Premiere (The Roku Channel)
* Blue Bloods Season Premiere (CBS)
* Culte Series Premiere (Prime Video)
* Fanatical: The Catfishing Of Tegan And Sara (Hulu)
* Fire Country Season Three Premiere (CBS)
* Happiness Is Series Premiere (Netflix)
* Happy's Place Series Premiere (NBC)
* Hysteria! Series Premiere (Peacock)
* It's Florida, Man Series Premiere (Max)
* LEGO Marvel Avengers: Mission Demolition (Disney+)
* Lopez vs. Lopez Season Three Premiere (NBC)
* MadS (Shudder)
* Rivals Series Premiere (Hulu)
* Self-Portrait As A Coffee-Pot Series Premiere (Mubi)
* Shark Tank Season Sixteen Premiere (ABC)
* S.W.A.T. Season Eight Premiere (CBS)
* The Devil's Hour (Prime Video)
* The Fabulous Lives Of Bollywood Wives Season Premiere (Netflix)
* The Man Who Loved UFOs (Netflix)
* The Park Maniac (Prime Video)
* The Turnaround (Netflix)
'* Twas the Date Before Christmas (Hallmark)
* Woman Of The Hour (Netflix)
* Yintah (Netflix)

SEE YOU ON FRIDAY!