Connected TV 5 Min Read

SteelHouse’s Mark Douglas Confident in Netflix’s Continued Strength

Written by Tim Edmundson

Streaming Wars are in Full Effect, But Netflix Still Top

“I think Netflix is still an incredible growth engine,” says SteelHouse CEO Mark Douglas. Netflix posted Q4 earnings this week, and while the stock fell, the SteelHouse CEO told Stuart Varney of Fox Business that its the streaming giant’s international growth that’s the real story here.

Initial reaction to earnings was mixed on the news domestic subscriptions didn’t meet expectations (550,000 actual vs. 589,000 expected), however Douglas isn’t too concerned. “The reason Netflix isn’t adding a lot of US subscribers is because everyone already has it… They’re adding 8.8 million subscribers per quarter, that’s one billion dollars in annual review per quarter, quarter after quarter. I don’t see that driving the stock price down.”

Read the Transcript

Stuart Varney: Okay, we pull back a little, not much, we’re still up nearly 100 points. 29,000, nearly, 29,300. Netflix. Well, they reported an increase in subscribers overseas, but not an increase in subscribers within America. Mark Douglas, SteelHouse CEO, he knows all about Netflix, and is our guest this morning. Mark, I’ve got to tell you, we had an analyst on the show. He specializes in Netflix, on the show about an hour ago, and he said, “Look, Netflix is heading down to maybe 2.75 a share. What’s your response to that?”             

Mark Douglas: I think Netflix is still an incredible growth engine. And I think, they’re, the expectations on the company, they’re adding 8.8 million subscribers a quarter. That’s a billion dollars in annual revenue per quarter, quarter after quarter. I don’t see how that drives the stock price down. It keeps the, the company growing, it keeps the stock going up.

Stuart Varney: I was told this morning that Netflix originates this year, 2020, I think it’s 130 different TV shows or series, all for Netflix, just this year. That’s an astoundingly large number, Mark.

Mark Douglas: Yeah, absolutely. And you know what’s interesting also? Because they’re adding so many international subscribers, there are laws in the EU that a certain percentage of the content has to be produced and in native languages in Europe. And so they’re not only adding this huge library of English-speaking content, they’re adding this library of international content. So it’s another advantage they have over their competitors.    

Stuart Varney: So you expect to see them keep growing their subscribers, number of, keep on growing. What about the competition? I mean, it is coming on strong these days. Won’t Netflix feel a little bit of a pinch from that?                 

Mark Douglas: Yeah. I mean, Disney+ is obviously doing really, really well. The numbers that I’m hearing are pretty incredible in terms of how many subscribers they likely added since they launched. But I think Netflix, they have not, that number one spot, you have to have Netflix, just doesn’t shake. The reason Netflix is not adding a lot of US subscribers is because everyone already has it. And so that’s just not shaking. People are not canceling their subscriptions. And that makes them number one in the space.

Stuart Varney: Tell me again, please, what you’ve told me many times in the past, but for the benefit of our audience, who may not have seen this: Netflix can tailor material to individuals all around the world. They know your profile, and can push stuff your way. Is that something that other streamers can’t do?

Mark Douglas: Yeah, so the thing to remember, Netflix is based in Silicon Valley. They’re a tech company first. Disney is based in Hollywood. And so Netflix as this tech company, what are one of the things tech companies are good at? It’s mining data. Netflix takes all this data that they collect on what you’re watching, and they use it to predict what you want to watch next, and that then influences what they finance in terms of those 130 shows and all the other content they’re licensing. And it just creates this incredible library of content for all of their consumers, and why people don’t churn.

Stuart Varney: So you are a Netflix bull, you believe that Netflix wins, or at least comes out on top, in some ways, the streaming wars, right?

Mark Douglas: Well, I think there are multiple winners. I think Netflix is definitely winning, Disney and Disney+ are definitely winner. Apple is a definite loser. I mean, they’re going nowhere right now. And so, but yeah, Netflix, if you want to invest in streaming, you have to have Netflix in your portfolio.                   

Stuart Varney: I’ll repeat that. Apple is a definite loser right now. Ooo, Mark Douglas, be careful, fellow. I mean, saying that about Apple is dangerous.

Mark Douglas: I’ll keep my iPhone in my pocket, but I’m not watching Apple Plus.

Stuart Varney: Gotcha. Mark Douglas, always a pleasure. Thanks for being with us, man. See you again soon.

Mark Douglas: Thank you.