Pictured: The Super Marios Bros. Movie, Chicken Run: Dawn of the Nugget and Leo
Netflix earnings just hit —it feels like they come along quicker every time. Not to mention that in the last round, they bomb-dropped with their announcement of the Lasseter/Skydance Animation deal. Co-CEO Ted Sarandos followed this up in December by highlighting the value animated movies offer in repeat watching. So far, Disney owns a significant portion of this real estate, and Netflix wants their own plot.
In addition to this, the streamer casually allowed 18,000 lines of performance data into the public sphere just in time for Christmas. I was reviewing my last earnings notes and clocked that Ted Sarandos said back then that the industry at large was:
“heading toward a world where streaming data will be much more readily available… it’ll be much more common for the data to be fully transparent.”
He wasn’t kidding. Little did we know what was coming. That’s kept them busy at least, which means that earnings headlines are relatively tame this time around, though there is plenty to unpack on kids’ content performance, which we’ll get to in a minute.
Key Netflix Earnings Headlines
Leggy subscriber growth… Just when you thought they couldn’t get any bigger, they did! More than 13 million subscribers were added for the quarter, noted across all territories. It would seem that the crackdown on password sharing has been successful. I, for one, sorted my folks onto an additional account. Netflix seem confident too, as there was reference to potential price hikes to come.
Netflix adds 13.12 million new subscribers in Q4 2023!
There are now 260.28 million Netflix subscribers globally! pic.twitter.com/AHDm6RlnVT
— What’s on Netflix (@whatonnetflix) January 23, 2024
WWE Monday Night Raw added… Netflix continues to wantonly flirt with entering the fray of sports. This 10-year deal sees the live flagship show of “sports entertainment” hit the streamer from 2025. From a kids/families point of view this is sure to be a draw. On the technical side, we’ll get to see if Netflix can handle the challenge of live.
This is an interesting nod to “franchise strength and programming expertise within traditional entertainment companies.”… This spoke to me personally, given my former life as a franchise programming expert. Netflix is great, and Netflix is strong, but there are still areas they need to improve.
Kids Content Performance for Q4 2023
Pulling in September/Back to School, Q4 would typically be a period traditional kids broadcasters would vie for as it’s so crucial for ad sales. Are we seeing this behavior manifest at Netflix?
Kids Movies
Netflix closed out the year with a bang as regards animation features. Musical Leo, with voice talent from Adam Sandler, and Chicken Run: Dawn of the Nugget from Aardman rounded out six animated films in 2023 for the streamer.
With this format, Netflix is still in a test-and-learn phase, trying out different genres and audience targets. They’re seeing green shoots for sure though: Nimona just landed an Oscars nod, and US performance for Leo was big, as you’ll see in a moment. The output deal with John Lasseter’s Skydance Animation will net into this mix going forward.
Just before Christmas, Netflix confirmed Leo as its biggest debut to date for an animated film. On a global level, it ran neck and neck with The Sea Beast. Where things get spicey, however, is in the US. Nielsen Streaming Content Ratings have Leo well out in front.
Is Adam Sandler relevant to kids in the US today? My guess is he still holds cachet with parents. Might Netflix have doubled down on marketing in the US? Again, if anyone can demand this, Sandler can/by all accounts will. This performance pitches Leo higher up the pecking order in terms of US viewership, more so than any other direct-to-Netflix animated feature before. In fact, it plumps it up as high as other recent theatrically released movies, though not up top with performance seen by Sing 2, Elemental or ultimate unicorn Encanto.
Just like every year, Christmas movies on Netflix were in abundance. This applied to both new and old as How the Grinch Stole Christmas (2000) featuring Jim Carrey rubbed shoulders with Family Switch with Jennifer Garner. Other films that made the top 10 included Christmas as Usual, Catering Christmas, I Hate Christmas, Best. Christmas. Ever!and known old favorite The Christmas Chronicles I and II.
Finally, we couldn’t close out comments on film this quarter without considering The Super Mario Bros. Movie, which launched on Netflix US in a second window after Peacock. The Universal deal across DreamWorks and Illumination continues to add real value on both sides. There was no doubt from the 18,000 lines of data that these movies add a lot of viewing for Netflix, though it gets harder to neatly quantify when it’s on a market-to-market level.
Kids Series
CoComelon Lane was the big winner when it came to series. This is Moonbug Entertainment’s narrative spin-off of their nursery rhyme IP, CoComelon. If you’ve followed this newsletter for any length of time, you *might* have heard me speak about it. The original is a viewership monster, driving eye-watering engagement across all metrics. Global audiences certainly lapped up the spin-off show, which landed in the global top 10 for six weeks, a real feat for a kids series.
Where it gets interesting is when we look at the US Nielsen Streaming Content Ratings. Unlike Netflix Global Hours Viewed, here viewership is bundled together at the season level, enabling easier comparison. We can see that CoComelon Lane undoubtedly gives an engagement bump to the franchise as a whole, but it’s looking like this levels out after a few weeks.
That’s not to say that CoComelon Lane isn’t a success. It seems to be part of a wider world expansion strategy for the CoComelon franchise, which has seen numerous spin-off channels launch on YouTube including Cody Time and Nina’s Familia.
Another interesting launch this quarter was Unicorn Academy, which hit the Global Top 10 across three weeks. Coming from toy company Spin Master, the series hits squarely with girls. It also employed an inventive strategy ahead of premiere. Full episodes windowed on YouTube, across Netflix After School, and a Unicorn Academy vertical channel, as well as in Roblox experience Twilight Daycare. We spoke about this with Ricardo Briceno from Gamefam in a recent episode of the Kids Media Club podcast.
On the Teen front, Netflix always deliver, and My Life with the Walter Boys was the example this quarter. In terms of third-party licensing, Young Sheldon also saw excellent performance.
What’s Next?
Rebooting the world of Oz for preschool, Dee & Friends in Oz launches on February 5th. Promotionally premiering episodes off platform seems to be a locked strategy for Netflix at this stage, as episode 1 of this series has already hit YouTube; check it out here.
Further evidence that Netflix continue to test and learn in animated movies, a direct-to-streaming Original comes from DreamWorks for the first time in ages/ever(?). Orion and the Dark launches globally on February 2nd.
It feels like animated features is a clear area that Netflix want to double down on, although we’ve heard this before and it’s never fully manifested what it needed to. Looking back I wrote one of my very first articles about Netflix on this point in 2020. This format is a grind, long development and production timelines, and the question looms: is a theatrical release needed to truly engage the flywheel? Leo has made progress in terms of viewership potential, but I’m still not sure this isn’t a re-pitch of the ceiling, rather than another floor on the house.