Business Breakdowns
Episode 86 Netflix: The Original
Business Breakdowns

Episode 86: Netflix: The Original

Business Breakdowns

Episode 86

Netflix: The Original

Ben Weiss is the Chief Investment Officer of 8th & Jackson. We cover Netflix's tech advantages, the state of the streaming market, and where future cash flows are likely to come from.

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[00:02:14] - [First question] - What Netflix is and their size and scale today

[00:03:49] - What portion of their content is original versus pre-existing licensed content

[00:05:01] - Netflix’s founding story and the three stages of their evolution 

[00:07:06] - Their culture and leadership from an investor’s perspective

[00:08:50] - Examples of courageous decisions Reed Hastings made 

[00:10:08] - Overview of the streaming market and how it’s impacted Netflix

[00:11:28] - How to think about the competitive landscape as it exists today  

[00:15:36] - Overview of their P&L starting from revenue and working down to EBITDA

[00:17:51] - Thoughts about unit economics and customer churn 

[00:20:28] - Evaluating how much pricing power they have 

[00:22:47] - How much headroom there is in the US for incremental subscription growth 

[00:25:43] - Other big revenue drivers and potential opportunities to sustain their trajectory 

[00:27:21] - The impact on Netflix’s churn rate when Disney Plus launched 

[00:28:31] - Capital allocation and profits spent producing original content 

[00:31:25] - Content spend compared to their competitors and the economics of licensing existing content 

[00:36:09] - Noteworthy numbers and strategies when it comes to marketing 

[00:38:19] - R&D spend and technology advantages that Netflix has

[00:45:34] - Other unique aspects about Netflix that are worth mentioning  

[00:46:44] - The bull case for Netflix and what would allow for their continued success

[00:49:54] - The biggest risks for Netflix and the bear case for the business 

[00:51:12] - Lessons for builders and investors when studying Netflix’s story

[00:55:10] - Where to go to learn more about Netflix

Netflix: The Original

Introduction

Jesse
This is Jesse Pujji. And today, we're breaking down Netflix, the pioneer in entertainment streaming. Founded in 1997, Netflix has evolved over the years to become the leader in streaming entertainment with over 200 million subscribers globally. To break down Netflix, I'm joined by Ben Weiss, the Chief Investment Officer of 8th & Jackson.

In this breakdown, we go into detail on Netflix. From their culture and tech advantages, to how content drives the business, and to how they will start generating substantial free cash flow in the future. Please enjoy this business breakdown of Netflix.

Jesse
All right, Ben Weiss, welcome to Business Breakdowns.

Ben
Great to be here.

The Streaming Landscape and How Netflix Got Here

Jesse
For those who don't know, this is an all-St. Louis episode, even though we're sitting in different places. And we're talking about a very exciting name, Netflix. I assume most people listening know, but just for those who don't know, what is Netflix and give us a brief view of their scale, size, any way you think about it in terms of where they are today.

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