Streaming Wars -- Netflix -- Where Does It Go From Here? Bloomberg -- April 21, 2022

What's the most remarkable "thing" in the video below. It has nothing to do with the singer, her band, or any of the people listening. It's something else. Her father takes the video and does a 360-degree of the audience. These is / are something missing. Very interesting.

I thought of that -- noting what was missing -- when I was re-reading Bloomberg's newsletter on the Netflix debacle. 

This is such an incredible story, I will archive it so that it is not lost in the ethernet.

The lede:

For more than a year, Netflix has told anyone who would listen that there was nothing to worry about. Its subscriber growth was slowing, but the problem was temporary. It was just working through Covid weirdness.   

Yesterday, the company reversed itself and admitted its business is losing momentum. Netflix lost 200,000 customers in the first three months of the year. The company predicts it will lose another 2 million this quarter. Its stock dropped more than 35% today. Netflix, worth $308 billion in November, is now worth less than $100 billion.

You will read a lot of takes about what this means over the coming days and weeks. Many skeptics of the streaming business will use this moment to claim they were right all along. Netflix is doomed, as is anyone who blindly follows in its footsteps. Ignore them. Netflix defied expectations for a decade and gave every company in Hollywood good reason to try and mimic its success. It’s got 221 million customers, and generates about $30 billion in revenue. 

But this isn’t just a bad quarter. This is a watershed moment for the streaming service, which must now attempt its most difficult transition in years. Netflix has always been the upstart, challenging the established powers. That allowed it to move quickly and adapt. It anticipated the last two seismic changes to its business and got in front of the problem before anyone else knew what was happening. It sacrificed its DVD-by-mail business to embrace streaming and started making its own shows before rivals pulled all of theirs.

Now Netflix is the incumbent, the dominant and default streaming service. It must defend its position against rival services that can give customers the same experience as Netflix, often at a lower cost.

So where does Netflix go from here? (A lot of people have asked me this question, so we decided to do a special edition of the Screentime newsletter to cover it all.)

Oh, so what is missing in this story? The writer did not blame the problems that Netflix has on the Russian-Ukraine war.  Every other piece of bad news caused by the Biden administration is said to be due to Putin's War. Without Putin's war, there would be no inflation, gasoline would be dirt-cheap, and there would be no supply chain shortages.

As far as the video goes, you’re on your own.

More Stimulus Money Released -- This Will Be The Largest LIHEAP Release In The History Of The Program -- April 21, 2022

Link to Tsvetana Paraskova.

The Biden Administration will release over $385 million to states to help Americans with their home energy costs through the Low Income Home Energy Assistance Program as President Joe Biden is looking to tame the soaring prices of gasoline and energy amid international prices at multi-year highs.

The latest funding, to be made available by the U.S. Department of Health and Human Services (HHS), adds to $4.5 billion in the American Rescue Plan for LIHEAP. 

In total, the U.S. Administration would be providing more than $8.3 billion in LIHEAP assistance to reduce heating and cooling costs for low-income Americans this year, which is the largest investment in a single year since the program was established in 1981.

LIHEAP assists eligible low-income households with their heating and cooling energy costs, bill payment assistance, energy crisis assistance, weatherization, and energy-related home repairs. Of course, the lower-middle class and the middle-middle class would see no assistance. Let them eat bread.

The Administration is scrambling to lower home energy costs and gasoline prices for Americans as international oil prices – the largest factor in determining the price at the pump – hit $100 after the Russian invasion of Ukraine. Yes, this is all about Ukraine. Nothing about killing the Keystone XL, banning drilling on federal land, slow-rolling fracking permits. 

Gasoline prices in the U.S. hit a fresh multi-year high in March at over $4.30 per gallon. We've talked about this before. That's the average; that's not what most people are paying.

Natural Gas Fill Rate -- April 21, 2022

Link here.

I don't know but social media suggests that natural gas prices are much sensitive to fill rate / amount in storage. I don't know but that makes sense based on what little I know about the dynamics of natural gas fill and release, supply and seasonal demand. 

This might provide a bit of background.

Netflix -- April 21, 2022

Locator: 10010NETFLIX.

Updates

April 21, 2022: when the Netfliix story broke, the first question I suggested investors needed to ask -- where did they subscribers go? Now, we have some insight: Paramount and Apple. Google paramount apple stealing subscribers from Netflix. Note this, though:

• as recently as March 8, 2022, NextTV: Apple TV Plus had nearly five times more churn than Netflix in 2021. This does not surprise me: Apple TV+ has limited offerings, none of them, it seems, particularly appealing to Americans.
  

April 21, 2022: Netflix in one chart -- 

Later, 2:30 p.m. Central Time: timeline today --

• futures this morning and at the open, the market surged again.
• about 10:30 a.m. CT, about two hours into trading, it's reported that Bill Ackman sells his entire holdings in Netflix, losing $400 million:
• sometime after that announcement: the market tanks. Netflix loses another $7.00.
• "Go woke, go broke."
  

Original Post

Background: tracked here at "streaming wars."

A reader brought up something I had completely forgotten in reply to this note; and, here.

From a reader overnight:

Just read your analysis of the streaming services. I think Elon Musk has this one right...Netflix produces stuff that is unwatchable. Their focus on producing content for the Woke crowd has led to a mass exodus of subscribers who don't want to watch that stuff.

Producing stuff that the market doesn't want is a sure fire way to go out of business, deep pockets or not.

Woke content.

I had forgotten all about that. Years ago, Netflix was putting out some great original content, good enough that I was almost persuaded to subscribe to Netflix, but held off. Just too expensive for a couple of movies, or short series. 

 

But in the last two years, I haven't seen a trailer for one "Netflix original" I would want to watch. 

That was point one.

Point two.

Netflix is said to be considering some ad-supported content to help lower the subscription cost, or at least maintain. 

I subscribe to  The WSJ electronic edition. It's fairly expensive but the best at what it does and so I am willing to pay the subscription price. My biggest peeve: when I click on a video embedded in The WSJ and the "story" is preceded by a lengthy commercial. If I'm paying for a subscription, why are there ads at all?

Finally, third point.

Netflix says as many as 100 million folks watching Netflix may be using passwords from extended family members and/or friends. Netflix is said to be taking action to stop this "password sharing." Won't work. Why are folks sharing passwords in the first place? Netflix will simply lose viewers; these are not the kind of folks that will subscribe to Netflix.

By the way, that first point: woke content. Apple is doing the same thing. Too much "woke content." I subscribe to AAPL TV+ for two reasons: a) incredibly cheap, $4.99 / month and for the longest time, free; and, b) I want to keep up with what AAPL is doing. But even Ted Lasso -- I only watched parts of a few episodes. But Ted Lasso was one of their very few offerings that I would consider not part of the "woke culture."

By the way, I see the new Kardashian series is a "Hulu original." Out of complete boredom and some curiosity I watched the first episode last night. Better said, I tuned in to the first episode last night, but it was so incredibly awful I could only last ten minutes and it was background noise at that while I did other things. It may well have a huge following but wow, talk about self-absorbed; awful; Big Brother on steroids.

This is not my dad's Netflix, and that's how I got started with Netflix a decade ago when I first wrote about it. Netflix lost its way.

Bloomberg newsletter: Netflix has finally hit a wall. Where does it go from here? I will come back to this essay. On my way to take Olivia to school.

Three Wells Coming Off Confidential List -- Airlines Surging -- April 21, 2022

So, how's "gasoline demand" going? Link here. 

Economy:

• someone over on twitter yesterday said the US was probably already in a recession:
• look at airline earnings this morning
• UAL and AAL are surging
• WTI up slightly
• market up huge in pre-market trading
  
• BRK-B up nicely in pre-market trading
• KMI tops estimates
• JNJ tops estimates
• AAPL might have a good day
  
• doesn't look like a recession to me
• everything suggests the economy is on fire
• April 18, 2022: masks off
  
• dividends raised: Sunoco; KMI (albeit, incredibly, incredibly small)
  
• mask mandate ended April 18, 2022
• stock of the day: NFLX
• Ackman liquidated his NFLX position; see letter here;
  
• in pre-market trading, down 3%; down $7; trading at $219.50
• reader has an interesting take on Netflix that I completely missed; 
• will get back to this later
  

US LNG exports:

• I think this has been forecast / telegraphed for the past several months, if not the past year:
• US to become world's top LNG exporter this year; links to Alex Kimani, one of the very good contributors over at oilprice.
  

Ghost stories for OPEC+:

• US running the show when it comes to oil.

Horror stories for US consumers, US oil:

• White House: two competing factions
• politically pragmatic: hate Big Oil -- they think they can thread the needle
  
• left/green ideologues: hate Big Oil -- will do anything to kill Big Oil
  
• high price gasoline: about the only option left -- ban US exports of crude oil / refined products
• that would push US into recession
• left/green ideologues: don't care; price to pay to kill Big Oil
• politically pragmatic: panic setting in;
• gasoline really does cost $6 / gallon in California
• unlike past periods when gasoline was this high, this time it's not transitory
  

Russian oil production: sanctions starting to bite; 

• short term: uncertainty among buyers to buy Russian oil at this point; compounded by simple issue of paying for Russian oil; rubles issues; Russia cut off from western banking system
• long term: Russian oil needs western technology; give it six months and rigs start breaking; won't get fixed;

DOE crude oil inventory: including the SPR, is dropping like a rock;

• releasing record amount of SPR will be seen to be as big a mistake as shutting down the Keystone XL
• going back to pre-Trump environmental rules, regulations will make things worse;

TSLA: blow-out earnings: others starting to weigh in;

• The WSJ;
• Stanphyl Capital;

Natural gas: drops below $7. 

********************************
Back to the Bakken

Legacy Fund deposits, for April, due out yesterday, not posted, maybe today or tomorrow. Link here. 

Active rigs:

$102.90	4/21/2022	04/21/2021	04/21/2020	04/21/2019	04/21/2018
Active Rigs	37	16	30	63	59

Thursday, April 21, 2022: 37 for the month, 37 for the quarter, 196 for one year

• 38457, conf, Slawson, Cougar Federal 1 SLH,
• 38454, conf, Slawson, Rainmaker Federal 5-25-36TFH,
• 36520, conf, Hess, BB-State A-LS-151-95-1615H-1,

RBN Energy: can eastern Canada's LNG export projects pass muster, part 3?

Increasing global LNG supplies has become of paramount importance given Europe’s decision to move away from pipelined imports of Russian natural gas. As such, any and all LNG export projects — from the expansion of existing sites to proposals for greenfield terminals — are getting a fresh look. As always, though, only the projects that make the most economic sense are likely to advance to a final investment decision (FID), construction and operation. Which raises the question, where do things stand with the handful of LNG export terminals proposed for Eastern Canada, which offers the shortest, most direct access to Europe? In today’s RBN blog, we conclude our series on Canada’s LNG export potential by assessing several greenfield export sites on its East Coast.