Netflix sees jump in subs as it begins to curb password sharing in the US, says TechCrunch
I have been listening to the podcast current mood before jumping on TechCrunch where I spent the time reading a story by Lauren Forristal about Netflix getting more subscriptions after it launched its campaign against password sharing. Lauren’s article reminded me of this idea of using google trends as a proxy for measuring the level of the cancellation and subscription rates of subscription-based businesses like Netflix, Spotify HelloFresh, Warby Parker, and others. I decided to write and share with you this idea as a second-take article of Lauren’s article and in which I will try to cross data from Google Trends and Netflix’s reported metrics about its number of users and financials. no need to tell you more about what Netflix is because it’s very likely that you have spent some time exploring its program before getting to read these words about this company which has put almost out of business a big company like Blockbuster. Then let’s start crunching numbers for trying to see if it’s possible to use google trends as a tool for spotting future changes in the performance of Netflix and other subscription-based businesses like it.
it’s likely that you already know what google trends is about. Google trend is about words and level of interest, precisely about the level of interest over time of keywords in different regions of the world. As it provides the level of interest over time for a given keyword then Google trends can be used to get a sense of the intentions and behavior of people and organizations. This key use case is what’s made search engine optimization (SEO) a key part of online marketing because the keywords we input in search engines like Google, Bing, and now the defunct search engine Neeva hide some actions we would want to take, like subscribing to a video streaming service like Netflix.
the first thing I did was to collect the number of searches in Google for the term “Netflix subscription” and the number of Netflix users month over month and plot these data on the same chart with each row of data on its own vertical axis such that the form of the two curves could be visually compared. here is this chart
you could see from the chart above that the curve of Netflix’s number of users and the number of searches for the keyword Netflix subscription have the same slope. if we calculate the correlation between them we get to a value of 1 which is a maximum value that tells that the number of Netflix users is highly positively correlated with the number of searches for the keyword Netflix subscription, which becomes the first signal that shows that maybe google trends could be a good predictor of Netflix performance.
To see if Google trends could be a good predictor for Netflix and other subscription-based startups let’s confront Lauren Forristal’s article that says that Netflix sees a jump in subscriptions with the level of interest for the keyword “Netflix subscription” with Google trends :
we clearly see that since May 2023 more and more people have been searching with the term “Netflix subscription” which is a signal of people getting to know more about Netflix’s subscription program for subscribing to this video streaming service. We could also see that the level of search is more accentuated in regions like Minnesota, Oklahoma, and Georgia, which may tell that Netflix has got more new subscribers from these regions. With these two pieces of information on hand, we could say that what has been reported by Lauren Forristal is an absolute reality. Netflix is seeing new subscribers come at its front door which is a signal for more future revenues and likely an increase of its stock price.
You could see from the chart above that Netflix's stock price has been increasing since May leaving the $340 per share bar to reach this price of 420 per share as of today June 10, 2023. Then you could guess that the level of search of the term Netflix subscription is not only a predictor of Netflix's future performance and a tool for fact-checking journalists but also a real tool for trading stocks of publicly listed subscription-based services like Netflix. If you are interested you could explore more this topic and frame and size the opportunities behind using search trends as stock trading signals but on my part what’s more pressing is getting to know more about the subscription-based economy because of this idea called subs… that’s burgeoning in my mind since which is now easier to do with generative AI like Chatgpt and Bard, the work of skilled professional journalists like Lauren Forristal and passioned reader like you. Then wish me good luck with this new idea as I do for all of yours.
