Netflix Experiences Cash Windfall Amid Writers and Actors Strike
In a surprising turn of events, Netflix has found itself with extra cash as a result of the ongoing writers and actors strike. The company announced that it will be spending less on content than originally predicted this year due to the strike by the WGA (Writers Guild of America) and SAG-AFTRA (Screen Actors Guild-American Federation of Television and Radio Artists), as well as delays in production starts.
As a result, Netflix is now expecting to have at least $5 billion in free cash flow for 2023, a significant increase from its previous estimate of $3.5 billion. This comes on the heels of the company generating $1.3 billion in the second quarter, compared to breaking even during the same period last year.
While Netflix admits that this may create some variability in its free cash flow from 2023 to 2024, it remains committed to delivering substantial positive free cash flow in 2024.
The streaming giant also reported an increase of 5.9 million global subscribers, reaching a total of 238.3 million subscribers. The implementation of password sharing has played a significant role in driving subscribers towards the newly introduced $7-a-month plan with advertising.
However, these numbers may not sit well with those participating in the strike, as it raises questions about Netflix’s financial capabilities and its role in the fight against Hollywood.
Despite the lack of content-related news in Netflix’s earnings statements, the company did highlight its revamped viewing figures. In June, Netflix made changes to the way it reports streaming viewership, introducing a new metric called “views” that calculates average viewership by dividing hours viewed by total runtime. This new metric will be used for the Top 10 rankings and all-time Most Popular lists.
Additionally, Netflix extended its measurement window from 28 days to 91 days to allow films and shows more time to gain popularity. These changes resulted in a shakeup in the top titles, with “Wednesday” surpassing “Stranger Things 4” as the most popular English-language series of all time.
Netflix expressed its belief that this new approach is more intuitive and fair, as it adjusts for runtime differences. The company also took a swipe at competitors for not sharing similar engagement data, urging other streaming services to become more transparent about engagement on their platforms.
While the writers and actors strike continues to disrupt the entertainment industry, Netflix has unexpectedly benefited from the situation, leading to increased cash flow and a boost in subscriber numbers.