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Netflix Co-CEO Greg Peters on ‘Baby Reindeer,’ Art, Algorithm

Netflix Co-CEO Greg Peters on ‘Baby Reindeer,’ Art, Algorithm

“Success in streaming is really about engagement” and finding hits is “more art than data,” Netflix co-CEO Greg Peters said in London on Tuesday. With the global streamer now reaching about 270 million, he said a conservative estimate of an average of two viewers per home means the streamer serves more than 500 million viewers worldwide.

“Variety and quality” is key “to satisfy this audience” given their diverse tastes, he said at Deloitte’s Media & Telecoms 2024 and Beyond Conference, . “We need a lot of great stories that appeal to these different tastes,” he said. “No algorithm” or data could have predicted the success of Sex Education, the exec noted, highlighting content decisions are “more art than data.”

“You never know where the next gem might be,” he noted, adding that Netflix’s goal is to find “the next obsession.” Key here is to have local and diverse executives helping develop a broad slate. “We are not relying on a single tastemaker,” Peters explained.

He also emphasized: “We can’t just manufacture a hit” by putting it in front of a global audience. “Our biggest, most effective promotional tool is Netflix itself,” the executive then told the conference, noting that the streamer’s trailers reach over 6 billion impressions a month, way more than on YouTube. Kids hit CoComelon also gets more viewership on Netflix than YouTube, he shared.

Peters opened his speech by highlighting the “tremendously fierce competition” for people’s time, attention, and spending. But he later also outlined that streaming, film and gaming present a $600 billion-plus total revenue opportunity for Netflix.

“In 2022, we also learned that we need to adapt,” meaning adding games and sports and live offerings, as well as adding an advertising tier, which he noted for ensuring “lower churn rates.” The recent Tom Brady roast proved to be a huge audience and conversation driver, and WWE programming will come to Netflix next year, he said about the firm’s live bet.

Peters also lauded streaming for providing “bigger audiences, more voices and better discovery.” He cited such hit U.K. originals as Baby Reindeer, The Gentlemen, and Fool Me Once, calling them signs of U.K. creative strengths.

“Big changes require big bets,” he said. “We were far from brilliant when we started these initiatives,” such as going global from the U.S. and boosting original output, which amounts to about $17 billion this year. At the same time, the company has been boosting operating margins, with free cash flow set to hit about $6 billion this year, compared with a $2 billion loss n in 2016.

Netflix recently reported that it had added 9.3 million subscribers in the first quarter of 2024 to end it with 269.6 million global subscribers. The company also said that it would stop reporting subscriber numbers and average revenue per member beginning in 2025.

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Some Wall Street analysts have crowned Netflix the king of streaming as Hollywood giants have struggled in their push to making their streaming business units profitable after an initial focus on subscriber growth.

Netflix’s user and financial momentum has been benefiting from the growth of its advertising tier and continued crackdown on password sharing. In mid-May, Netflix disclosed that its advertising-supported tier had hit 40 million monthly active users at a time when it is looking to shake up the technology and buying partners that currently power the offering.

Evercore ISI analyst Mark Mahaney recently reiterated his “outperform” on Netflix shares and boosted his stock price target by $50 to $700, arguing: “Netflix is in the strongest position financially, fundamentally and competitively that we have ever seen.”

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