Netflix doesn’t want Hollywood writers to go on strike — but the streamer has a “pretty robust slate of releases” that will help it weather a walkout better than others, co-CEO Ted Sarandos said.
His comments, on the company’s first quarter 2023 earnings interview, come a day after Writers Guild of America members overwhelmingly passed a strike authorization vote, giving union leadership the power to call a strike once the contract expires on May 1.
“We respect the writers, and we respect the WGA,” he said. “We couldn’t be here without them. We don’t want a strike. The last time there was a strike, it was devastating to creators. It was really hard on the industry. It was painful for local economies that support productions. And it was very, very, very bad for fans.”
Sarandos said “we want to work really hard to make sure we can find a fair and equitable deal so we can avoid one.” That said, “if there is [a strike], we have a large base of upcoming shows and films from around the world [and] we could probably serve our members better than most… We do have a pretty robust slate of releases to take us into a long time.”
Sarandos, asked about Netflix’s content spending, said the growth of that is tied to revenue growth. The company is still working through the effect of post-COVID “floodgates” opening on productions, which has made Netflix’s content spending “lumpier,” Sarandos said. In Q1, Netflix’s additions to content assets represented $2.46 billion in cash, down more than $1 billion from $3.58 billion in the year-earlier period.
Over the course of 2022-24, Netflix will average around $17 billion in annual cash spending on content, CFO Spence Neumann said, and then after that “there’s a big entertainment market to go after beyond that.”
“As we reaccelerate revenue [growth], we see a lot of opportunity to grow into that viewing and engagement and business opportunity ahead,” Neumann said.
Netflix believes it still has a lot of runway to grow engagement with viewers around the world. In its Q1 2023 letter to investors, it cited third-party estimates in five markets that show streaming remains a small minority of total TV viewing in each country (2% in Poland; 4% in Brazil and Mexico, 7% in the U.S. and 9% in the U.K.).
“We remain highly confident that streaming’s share of engagement will continue to grow at the expense of linear [television] since it offers a better experience (on demand, availability across devices). We believe this gives Netflix tremendous room for growth if we can continue to improve our service,” the company said.