Hollywood Strikes Can’t Keep Netflix Down
Since early May, writers have been picketing outside Netflix’s Hollywood offices as they fight for updates to their contracts with the entertainment industry’s biggest, and richest, companies. They’ve been refusing to work, disrupting productions, and creating chaos for an industry already reeling from the changes wrought by the rise of streaming. Last week, actors joined them in walking away from their work.
But turns out it’s hard to keep Netflix down. The streaming giant told investors on Wednesday that all of those paused productions have been helping it save some money, $1.5 billion to be exact. By the end of year, the company is now expected to have $5 billion in free cash flow.
The strikes don’t seem to have hurt Netflix’s standing with customers, either. The streamer added 5.9 million subscribers during the most recent three-month period, which ended after the writers strike had already been underway for close to two months. Even in the United States and Canada, where the effects of the strike are likely to be felt first, Netflix added nearly 1.2 million subscribers. That’s more new subscribers than it’s had in the region in at least a year.
Netflix attributed that growth to its recent effort to crack down on password sharing, and to offering customers more price flexibility with the introduction of a cheaper ad-supported plan. Both initiatives were put into place after the company was caught off guard by a sudden slip in momentum during the first part of last year, when it lost subscribers.
Before writers or actors went on strike, Netflix co-CEO Ted Sarandos predicted that the company would be fine if its content pipeline dried up. “We have a large base of upcoming shows and films from around the world, so we could probably serve our members better than most,” he told investors in April. And yes, the company often has shows stockpiled for months before they air, meaning that customers aren’t likely to feel the effects of the production pause for some time. Netflix also relies heavily on reality programming and documentaries, which aren’t affected by the strike, to round out its scripted library.
Even when Netflix’s steady flow of new scripted shows turns into a drip, it’s got thousands of hours of licensed movies and television shows that it serves up to its subscribers on demand. (NCIS, anyone?) To pad out that offering, Netflix recently began licensing HBO shows including Insecure and Six Feet Under.
Still, Sarandos said in a video interview on Wednesday that he “very much hoped to reach an agreement by now.” The son of a union electrician added that he knows striking can take “an enormous toll on your family, financially and emotionally.” He didn’t go into specifics about Netflix’s role in the contract negotiations, but said, “We’ve got a lot of work to do. There are a handful of complicated issues. We’re super committed to getting to an agreement as soon as possible, one that’s equitable and one that enables the industry and everybody in it to move forward into the future.”
Sarandos also noted that Netflix produces a wide variety of content, including local-language fare that won’t be impacted by the strike. Still to come this year on the streamer: New seasons of The Crown, Heartstopper, and Virgin River. So content procurement shouldn’t be a problem. Instead, what Netflix needs to worry about most is whether the strikes eventually turn the tide of public opinion. The streamer is already the villain for thousands of picketing writers and actors. And as LA Times columnist Mary McNamara recently wrote, it could eventually become that for the general viewing public too.
This story has been updated.