Weathering the strike: The Writers Guild of America has been on strike since May, and the Screen Actors Guild joined them last week. The movement is no small obstacle for Netflix and other streaming services, but the company clearly feels that it’s well-equipped to hold its ground if the strike rages on for months.
- Streamers have an advantage that TV networks didn’t during the 2007 WGA strike: Enormous content libraries that are still available to watch.
- Earlier in the year, Netflix also cut spending on US originals significantly, instead opting to focus on Korea and other south Asian countries that have produced hits like “Squid Game.” Now, Netflix can rely on countries without striking unions to produce popular content.
Our take: Netflix increased its third-quarter outlook, but concerns about the impact of the strike and softer-than-expected revenues mean there could still be trouble ahead. Still, revenues and users are both up significantly, showing that Netflix is reaping rewards from price hikes and ad-supported tiers after several quarters of decline and concern about market saturation.
- The password sharing boost could spill over into subsequent quarters, but it will still hit a limit eventually. Now that Netflix has solved a short-term problem, it’s time to look forward to the next venture—something Netflix sometimes struggles with.