Writers and Actors are on strike, and Netflix subscriber numbers are up. The company also saves money by not paying to create new shows during the strike. It seems the streaming giant's attempts to push subscribers into their own and not shared accounts, and a massive back catalog of mediocre crap to watch is carrying Netflix through the storm.
All eyes are on Netflix right now because the company is profitable, unlike many of its rivals in the media and entertainment space. "Every time Netflix does something, others follow," said Rick Munarriz, a senior media analyst with the investment advice company, The Motley Fool. "It is the ultimate influencer without taking selfies."
But Munarriz said Wall Street overhyped the company's success in the run-up to Wednesday's earnings report.
"The subscriber counts are growing, but right now, Netflix is not generating a lot of revenue," said Munarriz.
Munarriz also noted a downside to the company's free cash flow, which is expected to grow to at least $5 billion this year, up from its prior estimate of $3.5 billion. "So normally you'd think, 'That's great!'" said Munarriz. "But as they explained, part of this is because of the writers' and the actors' strikes, where they're not gonna be investing as much in content, so they'll be saving some money."
The company's profitability does not sit well with the many Hollywood actors and writers on strike. Their unions blame streamers like Netflix for the industry shifts that they say have led to diminishing wages and working conditions.
Disney seems to be having a harder time.
The entire industry is broken. This seems akin to the early days of telecom adapting to the internet. Everyone is arguing about "billing for minutes," i.e. residuals when their entire economy has moved on and no longer works as before. The entire idea is a broken line the studios likely used at first to pay someone less upfront for the work, on the promise of more later. Now that all the viewing is "later," that part of the system implodes. This is just one of the many places their economy has been broken by the new delivery methods and move away from theaters.