Netflix will report first quarter earnings on Tuesday afternoon, setting the bar for a season of financial reports that will reveal a whole lot about the state of streaming.

The streaming king disappointed investors at the beginning of the year with a weak outlook for its future subscriber growth. “The conventional wisdom seems to have changed overnight,” and not just about Netflix, Puck’s William D. Cohan wrote after the last earnings season. The point: There’s “plenty of agita on Wall Street these days about the economics of streaming video.”

Brian Wieser, global president of business intelligence at GroupM, called it a “reset” in an interview with The Guardian. In part, he said, it’s an “acknowledgment that the economics of the streaming business are not as good as the traditional media business.” But he also said Netflix remains “one of the most valuable media companies on Earth,” which no one would dispute. So… how was the first quarter?

Can Netflix pull a rabbit out of its hat?

Netflix shares are down 44% year to date, THR’s Georg Szalai wrote Monday, “and few on Wall Street expect the streaming giant’s first-quarter subscriber and earnings report on Tuesday to turn around the currently gloomy mood of investors.”

With Wall Street focusing “on increasing spending on original content amid intense competition in the streaming space,” he wrote, “Netflix seems to need to pull a rabbit out of its hat as part of its latest earnings report to change the mood in a big way. More likely, though, is that management will continue to emphasize the theme of streaming growth.”

>> Russia’s invasion of Ukraine will likely come up on Netflix’s earnings call, since the company suspended its service in Russia, impacting its total subscriber number…

>> I’ll be listening to the call for any guidance about Netflix’s experiments with charging for password sharing in Chile, Costa Rica, and Peru…

The inflation factor

This new report by media consultancy Kantar is about the UK, but it could easily apply in other countries: Soaring inflation “has forced many households to cut back on non-essential spending, and subscriptions to video streaming platforms are firmly in the firing line,” Anna Cooban wrote for CNN Business. Per Kantar, “Britons canceled about 1.5 million subscriptions in the first three months of 2022, up by around 500,000 from the previous quarter. More than a third did so to save money…”

Lowry’s insight

Brian Lowry writes: “Netflix won’t be showing up to its earnings day with the best-picture Oscar that the service has long coveted, but it has clearly made enough inroads in that competition to justify the strategy. Yet the question is to what extent Netflix has been busy pursuing what amount to symbolic victories without adequately addressing the pressures on its business model, especially as studios funnel content to their own streaming services, forcing Netflix to both spend more on developing content and cast a wider net in terms of acquiring it from around the globe. The irony is that Netflix’s cultural footprint has never felt bigger — from launching surprise hits like ‘Squid Game’ to below-the-radar shows breaking out and trending — raising the possibility that the service could win a whole lot of battles and still wind up losing the war…”

“Binge Times” comes out Tuesday

Perfect timing: On Tuesday Dade Hayes of Deadline and Dawn Chmielewski of Reuters are releasing a big new book titled “Binge Times: Inside Hollywood’s Furious Billion-Dollar Battle to Take Down Netflix.” The book “breaks down the absolute mayhem of the streaming wars in a way that even a casual industry watcher can digest,” reviewer Michael Malone wrote. “It is a thoroughly reported work that makes for a compelling read.” Deadline and Lit Hub have published excerpts…

Further reading…

— Is this Netflix’s new way to develop content, combining games and shows? “Netflix is doubling down on games with the upcoming launch of an Exploding Kittens mobile game and an animated cartoon series…” (VentureBeat)

— Gerry Smith’s latest: “Jon Stewart’s struggles add to list of streaming talk show flops…” (Bloomberg)

— After a two-year ban due to Covid, character hugs are back at Disneyland. Brooks Barnes went to Anaheim to document the moment… (NYT)

— “Paramount Global has agreed to pay $14.75 million to shareholders of the former CBS Corp in a proposed class action claiming the company’s failure to disclose sexual misconduct allegations against former CBS chief executive Leslie Moonves artificially inflated the value of its stock…” (Reuters)

The-CNN-Wire™ & © 2022 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.