Netflix cancellations surge after reed Reed Hastings donates to American presidential candidate Kamala Harris

by Lucas Shaw, Bloomberg

Netflix suffered a surge in cancellations in the days after its co-founder and chairman, Reed Hastings, endorsed Kamala Harris for president and donated millions to her campaign.

The rate of cancellations – churn in industry parlance – nearly tripled in the United States after his endorsement, according to the researcher Antenna. The streaming giant has the lowest churn in the industry.

Customers in the United States cancelled Netflix at a higher rate in July - 2.8% - than any month since February.

That is largely due to the company's decision to phase out its basic tier. Basic was the cheapest advertising-free version of Netflix. But the five-day period after Hastings' endorsement was unusual, even for July.

Hastings, a longtime Democratic donor, endorsed Harris in a post on the social media platform X on 22 July. A day later, Hastings told The Information that he donated $7 million to a pro-Harris super PAC.

Shortly after Hastings' endorsement, fans of Donald Trump began urging people to drop the service.

Some posted photos showing they had closed their accounts alongside the hashtag #CancelNetflix. Three days later after the donation became public, 26 July, was the single worst day for Netflix cancellations this year. 

The company declined to comment while Hastings didn't respond to a request for comment.

The spike in cancellations at Netflix lasted just a few days. It wasn't as severe as the reaction in 2020 when conservatives asked Netflix to take down the French movie Cuties, which they felt exploited children.

The long-term effect of these incidents can be hard to gauge. Advertisers and companies were eager to speak out on social issues following the murder of George Floyd. Many companies raced to show their support for the Black community and started new programs or initiatives to promote diversity, equity and inclusion (or DEI).

Netflix shifted cash to black-owned banks while Hastings donated to historically black universities.

Yet in recent years opponents have started to take on DEI initiatives. 

Sales of Bud Light tanked after an advertising campaign featuring a transgender influencer sparked a boycott by conservatives. Critics of DEI have been emboldened since the Supreme Court ruled affirmative action programs designed to boost racial diversity on college campuses are discriminatory.

Entertainment companies have faced a backlash after their executives took a stance on political issues.

Walt Disney spent two years battling Florida Governor Ron DeSantis after the company criticised a law that restricts classroom discussion of sexual orientation and gender identity. The company has also faced questions in recent weeks for the close relationship between Harris and its entertainment co-chair, Dana Walden, who oversees ABC News.

Hastings has always been civic-minded. 

He was working on education reform when he started Netflix and has devoted a lot of time and money over the years to charter schools. As his wealth has grown, he and his wife have given billions to philanthropic causes. 

He wasn't as outspoken about elections until more recently. But earlier this year, he was a vocal and public member of the chorus of celebrities and executives calling for Joe Biden to step out of the American presidential race.

Netflix has always tried to keep Hastings' donations and politics separate from its business. Eager to appeal to viewers of all persuasions all over the world, the company is sensitive to any perception that it's politically biased. Disney faces a similar conundrum.

Like most companies in entertainment and Silicon Valley, Netflix's employees lean to the left politically. 

Co-CEO Ted Sarandos is married to Nicole Avant, a former ambassador in the Obama administration. Sarandos and Avant are active in politics and were advocates for Rick Caruso in the Los Angeles mayoral race in 2022.

Netflix reports financial results in mid-October.

Netflix adds 7 million subscribers, will enforce password crackdown more broadly in 2023 as Reed Hastings steps down as co-CEO.

by Thinus Ferreira

In its 2022 4th quarter earning report presentation on Thursday night Netflix announced that it had added 7 million subscribers, that it will enforce its newly-implemented password crackdown drive more broadly in 2023 and that Reed Hastings is stepping down as the video streamer's co-CEO.

Netflix added 7.66 million new subscribers during the last quarter of last year, more than the 4.5 million new subscribers it projected. It means that Netflix ended 2022 with 230.75 million subscribers in total worldwide, also higher than its projected 227.59 million.

Netflix announced that Reed Hastings, who co-founded Netflix and who will remain executive chairperson, is stepping down as co-CEO, while Ted Sarandos will remain as co-CEO.

Greg Peters is promoted to co-CEO, with Bela Bajaria promoted to chief content officer and Scott Stuber getting promoted to Netflix Film chairperson.

Netflix grew by 3.2 million subscribers in its Africa, Europe and Middle East region, 910 000 subscribers in the United States and Canada, added 1.76 million Latin American subscribers and another 1.8 million subscribers in the Asia-Pacific region.

In its shareholder letter, Netflix writes that "2022 was a tough year, with a bumpy start but a brighter finish".

'We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering. As always, our north stars remain pleasing our members and building even greater profitability over time."

Password crackdown for Africa

Netflix which started to introduce a password crackdown on sharing accounts in some regions in late-2022, plans to roll this out more broadly this year, including across Africa and South Africa.

"Later in Q1, we expect to start rolling out paid sharing more broadly," Netflix says in its latest shareholder letter.

"Today’s widespread account sharing (100M+ households) undermines our long-term ability to invest in and improve Netflix, as well as build our business. While our terms of use limit use of Netflix to a household, we recognise this is a change for members who share their account more broadly."

"So we've worked hard to build additional new features that improve the Netflix experience, including the ability for members to review which devices are using their account and to transfer a profile to a new account."

"As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don't live with. As is the case today, all members will be able to watch while travelling, whether on a TV or mobile device."

Netflix: Not all shows to be on its cheaper ad-funded tier, predicts linear TV will be dead in a decade.

by Thinus Ferreira

Netflix plans to add ads for a new advertising-funded, cheaper tier which the global streaming service plans to roll out in early 2023, although co-CEO Ted Sarandos told investors on Tuesday night that some Netflix shows and content won't be available on this cheaper plan.

Netflix also predicts the end of linear TV within the next 5 to 10 years.

On Tuesday night in its second quarter results, Netflix announced that it lost another 970 000 subscribers, although its more than a million subscribers less than what it expected and predicted in its market forecast in April when it projected that it could likely lose another 2 million subscribers by the end of June.

Netflix now has 220.67 million subscribers worldwide and expects to add subscribers again during its third quarter of this year, predicting an addition of 1 million subscribers between July and the end of September this year.

Netflix lost subscribers in the United States and Canada during the quarter, and also saw subscribers losses across Africa, Europe and the Middle East. Netflix added 1000 subscribers in Latin America and 1.8 million subscribers in the Asia-Pacific region.

In Netflix's recorded investor's message for its second quarter results, CEO Ted Sarandos warned that not all Netflix content will be available to subscribers to opt for the cheaper ad-funded tier when it's launched globally.

The ad-funded Netflix tier will include all Netflix Original shows and content since Netflix owns that, but some other content licenced from American and other international studios and distributors will not be available on the cheaper plan.

"The vast majority of what people watch on Netflix we can include in the ad-supported tier today. Some things we're in conversations with studios on. We will clear some additional content. Not all of it," Ted Sarandos said.

Last week Netflix announced that it will be partnering with Microsoft as its technology and sales partner in launching an advertiser-funded tier with the aim of trying to curb churn and subscriber losses that stunned Hollywood and investors.

In its usual shareholder letter accompanying its quarterly results, Netflix said that Microsoft is "investing heavily to expand their multi-billion advertising business into premium television video, and we are thrilled to be working with such a strong global partner".

"We're excited by the opportunity given the combination of our very engaged audience and high-quality content, which we think will attract premium CPMs from brand advertisers."

"We'll likely start in a handful of markets where advertising spend is significant. Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So, our advertising business in a few years will likely look quite different than what it looks like on day one."

"Over time, our hope is to create a better-than-linear-TV advertisement model that's more seamless and relevant for consumers. While it will take some time to grow our member base for the ad tier and the associated ad revenues, over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues)," Netflix said.

"We've been through hard times before. We've built this company to be flexible and adaptable and this will be a great test for us and our high-performance culture."

"Were fortunate to be in a position of strength as the leader in streaming entertainment by all metrics (revenue, engagement, subscribers, profit and free cash flow). We're confident and optimistic about the future."

Netflix co-CEO Reed Hastings, in the earnings recording, predicted the end of traditional linear television within the next decade, saying "It's definitely the end of linear TV over the next 5 to 10 years".

Rival streamer Disney+, now also available in South Africa, also plans to roll out a cheaper ad-funded tier for subscribers within months.

BREAKING. Netflix launches in South Africa and 129 other countries and territories at $8 or R126 per month.

As expected, the global video streaming giant Netflix announced on Wednesday evening South African time that its launching and also instantly becoming available in South Africa, as well as 129 other countries and territories worldwide, costing South African subscribers $7,99 (R126) per month for use on a single screen.

Besides South Africa Netflix has instantly become available across the entire African continent.

As was expected, Netflix made the announcement through co-founder and CEO Reed Hastings at the annual Consumer Electronics Show 2016 (CES 2016) in Las Vegas in the United States.

Netflix didn't respond to a media enquiry I made yesterday asking about its impending launch in South Africa.

Besides becoming accessible in South Africa, Netflix is launching in 129 other countries, including India, Nigeria, Turkey, Singapore, Russia and Saudi Arabia.

Netflix in 2015 said its goal was to be in 200 countries by the end of 2016 - the addition of another 130 to the existing 60 brings it to 190 countries as of today.

Netflix is not yet in China, one of the biggest and fastest growing consumer markets, and is also barred by American law from entering North Korea, Syria and the Crimea.

"Today you are witnessing the birth of a new global internet TV network," says Reed Hastings in a statement.

"In 2016, the company plans to release 31 new and returning original series, two dozen original feature films and documentaries, a wide range of stand-up comedy specials and 30 original kids series - available at the same time to members everywhere."

"From today onwards, we will listen and we will learn, gradually adding more languages, more content and more ways for people to engage with Netflix. We're looking forward to bringing great stories from all over the world to people all over the world," says Reed Hastings in the statement.

Netflix at www.netflix.com/za is instantly competition for Naspers' ShowMax, the struggling VIDI from the Times Media Group, China's PCCW Global's ONTAPtv.com, MTN's relaunched VU and in a sense also MultiChoice's satellite pay-TV platform DStv.

While Netflix content can only be streamed, ShowMax on phones and tablets but not computers and ONTAPtv.com allows subscribers to download content within South Africa to watch offline.

Netflix in South Africa will also have to contend with the same inhibiting factors negatively impacting all the other video-on demand (VoD) services and impeding its uptake: prohibitively expensive internet broadband costs, slow internet speeds, and slow growth in broadband penetration.

In an email to South Africans, the video streaming giant said "Netflix is now available in South Africa" and invited people to make use of a free month's access.

"Now you can enjoy TV shows and movies on your TV, computer, phone and tablet," said Netflix.

Netflix is giving a trial use of one month to test the service. South African and African users will still have to provide a valid credit card, and will get an email 3 days before your month long trial period ends, as a reminder that your credit card is going to be billed.

To use Netflix on two screens will cost $9,99 per month (R158) while an ultra-HD premium Netflix service cost $11,99 per month (R190) giving access to up to 4 screens.

The minimum required connection speed is 0.5 megabits per second, but Netflix says subscribers may want a faster connection for improved video quality.

Subscribers can watch Netflix on a laptop, computer, phone or tablet, or anything else that offers the Netflix app, from gaming consoles like Wii, Xbox or PS3, DVD or Blu-ray players, HDTV TV sets, set-top boxes or home theater systems.

The major expansion announcement was expected since Netflix previously announced a massive increase in content cost to produce new shows 600 original hours in 2016 at a cost of $5 billion - money that has to come from somewhere.

Netflix is already producing more television that traditional broadcasters like CBS and FOX in America.

In the past few days Netflix's stock price tumbled as investors worried about Netflix's ability to keep generating profits due to limited growth in the United States while Netflix announced a bold and massive increase in content generation.

It became obvious that Netflix is eyeing massive global expansion at the same time to focus on generating money from international subscriptions in all the foreign markets it can.

Netflix has 66.02 million paying subscribers in the United States and 23.95 million in the rest of the world.

"We live in an on demand world, and there's no going back," said Reed Hastings who delivered the keynote address at CES 2016, during which the global Netflix expansion announcement was made.

"In the first 6 months after we launched in Australia and incumbent broadcasters created competing subscription video-on-demand (SVoD) services, BitTorrent usage dropped by 14%," said Ted Sarandos, Netflix chief content officer at the keynote address, speaking after Reed Hastings.

Netflix plans to be global by 2016, including South Africa, says the growing video internet streaming service.

Netflix, the growing video internet streaming service which is accelerating its worldwide accessibility, will definitely be available in South Africa before the end of 2016 a Netflix spokesperson told TV with Thinus on Thursday night.

It follows the aggressive roll-out of Netflix - currently accessible in about 50 countries - to more countries across Europe at the end of 2014. Netflix will roll out from March in Australia and New Zealand - places with highly comparable TV markets to South Africa.

"We intend to make Netflix globally available by the end of 2016 including South Africa," a Netflix spokesperson told me last night.

Netflix wants to aggressively expand its on demand streaming service to an additional 150 countries within the next two years, to 200 countries and territories, in order to create "material global profits" from the beginning of 2017.

Netflix's arrival in South Africa - a TV and video market still hampered by slow and expensive internet and broadband costs - will mean an avalanche of new content as the company has started to ramp up production of original new series, and plans to roll out about 20 new TV shows per year besides its library series and movie catalogue.


Will end "geoblocking"
Netflix also plans to end "geoblocking"as soon as possible, giving people worldwide the same access, as far as possible, to the same content at the same time.

At the moment Netflix is blocked in South Africa and in several other countries outside of the United States where Netflix doesn't yet run a regionalised service, with users who have to make use of a "VPN" to circumvent the regional restrictions at an additional monthly cost.

Netflix' arrival in South Africa within a year or two carries implications most notably for MultiChoice's DStv satellite pay-TV service and the pay-TV broadcaster M-Net who for the past two decades worked hard to secure exclusive broadcasting rights to top American TV shows in elaborate and multi-year deals with Hollywood studios and international distributors.

Although Netflix doesn't have sport, it did already sign rights for hugely popular and buzz-worthy Netflix produced shows like House of Cards and Orange is the New Black which are currently being shown on M-Net.

With critically acclaimed shows like these which will run several more seasons - definitely longer than the next two years and will thus overlap with Netflix's South African launch - these Netflix shows will either start to disappear from M-Net and DStv prior to Netflix's launch as it prepares to enter the market within the next two years to make it available on its own service, or Netflix will "take it back" whenever it can after its launch.

Already with Netflix's launch in Australia, neither House of Cards nor Orange is the New Black will be available on Netflix there - the dramas are shown on Foxtel due to similar pre-existing broadcast licensing deals signed with Foxtel prior to Netflix's entry into those countries next month.

Besides DStv and M-Net, the arrival of Netflix will also mean direct competition for new South African video-on-demand (VOD) players like VIDI, Altech's Node and MTN's FrontRow which all launched services in the latter part of last year.  


Global roll-out, global content
Netflix surprised this week with the announcement of its aggressive worldwide strategy during the announcement of its latest quarterly results, and says that its plan is to sign content deals on a global basis.

What is means is that Netflix wants to release and show the same show, like Orange is the New Black or Marco Polo at the same time in all the countries it can, for viewers to binge-watch at their own time, releasing a brand-new TV series every three weeks.

"We had the vision to start to figure out how to get global rights for some of the content by moving up the food chain," Reed Hastings, Netflix CEO, said this week on the company's conference call.

"We have been pushing on that dimension, where we can get the global rights and we don't have to go country by country across 200 countries, but can instead provide the producer upfront money, guaranteed money and get great access".

Netflix chief content officer, Ted Sarandos, said that "instead of having to go country by country to pile up those deals, and line up those windows, this enables us to make the service, the selection, far more global for viewers around the world who increasingly know exactly when these shows began, and are hungry to see them as soon as they can".