Netflix
Content Popularity
and Netflix Stock
by Teland La
This is a front end website for my code. You can also view the code in the Observable notebook by clicking the button to the right.
ObservableBig tech companies have always seemed to operate on a backwards business model. Look at Uber. In August 2023, they posted their first-ever operating profit quarter after years of losses. Yet, even though the company was losing money every year, the company valuation kept rising. This is the same with Amazon, Snapchat, Zillow, Spotify, and more. In a way, it makes sense - these companies have the market share and the users. But there's also something else - they all are (relatively) good products that work. And at it's core, I think the product itself is the most important part of the equation, and a good predictor of how a company is going to end up. If the product itself is bad, people aren’t going to want to stick around and use it. Look at companies like AOL, MySpace, and Yahoo, which were some of the biggest internet companies before they fell off the map. They had tons of users, but in the end, the actual product wasn't innovating fast enough, and the users left as a result.
But why is this relevant?
Well, Netflix is an extremely interesting case study for this premise. Their "product" isn’t like other tech companies - to innovate, they don’t necessarily release new technical features. Instead, they have to release media. No matter how often they change their AI recommendation algorithm or introduce new user interface designs, it's the new movies and shows that keep the users on Netflix. These shows are unique additions to the product, because not only do they provide entertainment, they can also have an extremely large cultural and economic impact on the world. Squid Game helped boost South Korea’s economy, Stranger Things helped a song from 1985 go #1 in 2022, and Netflix has worked with influential figures like Prince Harry and Barack Obama.
So it brings up the question: how does all that content on Netflix affect its stock? When Squid Game took over the world in 2021, did it go up or down after? How important is the global market? How important is English vs Non English content? Today, we’ll take a deep dive into the content that Netflix provides, and see what happens to the stock price after it's released. Note that this data goes from July 2021 to August 2022 (limited by the dataset).
This article is best viewed on a desktop (1920x1080). If you're on mobile, you can still read the article, but the charts will be a bit harder to see.
Every week, Netflix releases a top 10. "Rank" corresponds to the rank in the top 10 - rank 1 means it is the top show of that week, rank 10 means it is the 10th ranked show of that week.
Above, you can find a line chart that compares Netflix’s stock price to a category of Netflix media. Netflix publishes their top 10 shows/films every week, and you can toggle by the rank (1 to 10), as well as the category (Film or TV Show, and English or Non-English). Note that the y-axis on the right changes based on the type of category that you select.
Hover over the chart to find information on the stock price in that week, and the show/film information (title and number of hours viewed). The dates for this information, like everything else in this article, is from July 2021 to August 2022, which is the time frame for the dataset that is used.
Key Takeaways
1. Netflix stock may have risen in conjunction with Squid Game's rise
Select the TV (Non-English) category to see it on the chart!
Why That Matters: Squid Game is a Non-English, Non-American show, breaking entertainment norms. Despite these changes to the status quo, no other Netflix show has come close to the viewing of Squid Game (the next highest, Stranger Things, was watched more than 200 million hours less).
According to Bloomberg, "The streaming pioneer’s shares have risen 7.1 per cent since the launch of the show, outshining other big technology stocks and its streaming rivals."
The TV (Non-English) chart suggests a similar trajectory between stock price and hours viewed for Non-English TV content.
2. You'll notice a large drop in Netflix stock around the beginning of 2022.
Why That Matters: In 2022, the company reported that it lost subscribers for the first time in more than a decade.
This is most commonly referred to as the Great Netflix Correction. This is was due to a recession that seemed looming and inflation going up immensely, meaning consumers are becoming more cheap. In addition, among all the other streaming services like Disney+, Hulu, HBO Max, Peacock, and Paramount Plus, Netflix was the most expensive.
3. After the drop, Netflix stock may have leveled in conjunction with Stranger Things' rise
Select the TV (English) category to see it on the chart!
Why That Matters: According to The Financial Times, "Netflix lost 1mn subscribers but called that a success because it avoided an even greater loss thanks to hit shows such as ‘Stranger Things’. ... Netflix executives this week (week of 7/20/22) appeared to be in damage control mode, taking shots at rivals and offering up data to prove its dominance. Looking at the category TV (English), we can see that Netflix's stock leveled during that time period.
Bar races are fun ways to see change over time. You can control this one and see the change it also has on the stock price. When you move the slider, it changes the date, and you can see the stock graph at that date that you select. This is meant to be a more holisitic visualization as compared to the line chart where you can see all of Netflix's media at once. Feel free to just press play, and watch how the bar chart changes over time.
Key Takeaways
1. Many Netflix shows come for a few weeks and then leave the top 10 entirely
Why That Matters: According to Movieguide, "Netflix is revealing plans for a strategy shift, emphasizing quality over quantity when it comes to its content."
Scott Stuber, the head of Netflix’s film division, said, “Right now, we’re not trying to hit a set number of film releases. It’s about ‘Let’s make what we believe in. And let’s actually put forth a slate that we can stand behind and say, ‘This is the best version of a romantic comedy. This is the best version of a thriller. This is the best version of a drama."
The shift in strategy is occurring at a time when many are blaming Netflix for altering the entertainment industry, particularly in terms of revenue distribution. Recently, In addition to the media content, Netflix has also expanded into areas like advertising and gaming, which are seen as its next frontiers. This expansion is part of Netflix's strategy to keep its services fresh and appealing to its users and investors.
2. In October 2021, Squid Game started becoming more and more popular. A couple weeks later, Netflix's stock hit it's record high ($690)
Why That Matters: It may indicate that audiences are okay with Non-English content, and a more global audience is subscribing to Netflix.
Each node is a different piece of media, and the size of the node is associated with the popularity (so the larger the node, the more hours watched for that film or TV show). The legend for the nodes are on the bottom left - there is a difference between English and Non-English piece of media. If the colors are red, that means that the Netflix stock is down for that week, and if it is green, that means the stock is up for that week. If the movie/show is too unpopular, hover over it to get the title and the hours viewed in the entire world.
As for the world map, we can poke around the countries and see what they watch the most at different dates. The color of the cirlces corresponds to if the stock price is up or down for that week. In some countries, you can see the most viewed show but not the viewing data. Here's why: The data for this visualization is based off of estimations. Netflix only releases global hours viewed for each of their shows, so the data counts the subscribers of each country (from Q1 2021) and calculates a proprotion score for each country based on how many people are subscribed in that country. That global hours number is then multiplied by the country's proportion score to get an estimated number of hours viewed.
Key Takeaways
1. Netflix's domestic market, the United States, has reached saturation levels.
Why That Matters: Since a significant portion of the population is already subscribed, the limited growth potential in the U.S. means Netflix has to look global. If they can successfully expand globally, it can instill confidence among investors, leading to a positive sentiment towards the stock.
2. Netflix is becoming more global.
Why That Matters: The United States represents 32% of Netflix subscribers. That means that 68% of the global market is extremely important to the company.
Netflix was originally just going to offer series and movies that were in English and translating them by using subtitles or dubbed voices. However, they realized that producing content for local global audiences was key. According to Weglot, "Creating original content that really reflects the local culture allowed Netflix to attract foreign audiences and facilitate entry into new markets. In fact, in 2019, Netflix reported that the most popular titles throughout India, Korea, Japan, Turkey, Thailand, Sweden, and the United Kingdom were all local originals."
Another way to visualize the data is to become a Netflix executive yourself and try making your own piece of Netflix media. You can use attributes like actors, genre, type of media (TV or Movie), and the content rating (PG, PG-13, etc) to make your new piece of Netflix media.
Note that this data is obviously not comprehensive. If you actually released this piece of media, Netflix stock would not actually change that much (these are estimates). Pieces of media have many different attribuites in addition to the ones that I included here, like critic rating, amount of media coverage, and more external factors. It assumes that all shows and films added to Netflix are weighted the same, regardless of how many people watched it (Netflix does not publish all viewing numbers, only top 10s). Also, many things can change NFLX stock like revenue, growth numbers, and more. This is just a fun way to visualize the data.
This data was created by combining a dataset that included every piece of media that Netflix ever released with Netflix's stock data. I calculated the percentage change in Netflix stock one week after a piece of media was released, and joined it with different attributes of that media, like the actors, genre, type, and rating. For example, if Stranger Things was released July 4, 2021, I calculated the stock price change one week after that date, and joined it with different attributes of Stranger Things. For cases were there were multiple attributes that were the same (like the same actor in two different pieces of media and multiple pieces of media that are the same content rating), I took the average. Take into account that every datapoint in an attribute was weighted the same. What that means is that a 10th ranked actor in a movie was treated the same as the main actor for the purposes of data. However, in terms of actors, this isn't the case when you create your own piece of media (you'll see why soon).
Also, you are in control of the weights. The weights tell you how impactful an attribute is to a piece of media to the stock price. By default, I set the weight of the actors and the genre (40%) to be more impactful than the type and rating (10%). You can change them as neccessary - just make sure that they always add up to 1.
You can change attributes as neccessary with the dropdowns, and then enter a name for your piece of media and click Submit! You can then see the result in the colorful window below. Something fun you can do is to keep trying new configurations to see how high the stock price goes up.
Type an actor's name, and then press Enter. Click the "+" to add another actor. If you can't find an actor's name, that means that they weren't in a piece of Netflix media that was released from January 2008 to September 2021. The ranking of the actor matters. The first actor that you put will be the highest weighted, followed by the second, third, and so on, so choose your lead actors carefully!
And that's a little bit about the intersection between Netflix media and its stock. Hopefully you had as much fun playing around with the visualizations as I had making them.
Netflix Stock Price Data (historical stock price data for Netflix) - Yahoo Finance
Netflix Movies and TV Shows Data (list of all media released on Netflix) - Kaggle
Netflix Top 10 Data (hours viewed for top 10 Netflix media, sorted by week, contains country data as well) - Kaggle
Netflix Global Subscriber Data - Various Sources - Check Columns Z and AA