Netflix’s change in view accounting and a misleading use of Google Trends

This week, Netflix dropped its latest earnings report. There are a lot of positive announcements from Netflix and kudos to them for weathering the rising competition from a plethora of streamers, so far. Nonetheless, there are a couple of notable points that I am either intrigued by or in disagreement with.

How a view is counted

Netflix used to register a view whenever a user passed a 70% of a show or a movie. Recently, the company changed that policy. According to the latest earnings report, whenever a viewer reaches a two-minute mark, it counts a view.

Netflix communicated the change in a tricky and inconspicuous manner. The explanation on the two-minute mark only came in the footer; which certainly isn’t where readers’ attention focuses on.

As you can see in the last sentence in the screenshot above, the change in the view accounting usually results in an increase in view because of obvious reasons. I don’t believe two minutes is enough to determine the intention of the audience. It is not uncommon that viewers watch 20 minutes of a show or a movie before leaving. If Netflix thinks that 70% is too high a standard, 40% or 50% would make more sense than the new implemented policy.

Using Google Trends to compare The Witcher with Mandalorian

In the Competition section of the report, Netflix dropped a Google Trends screenshot that showed interest in its currently flagship show The Witcher, Mandalorian, Jack Ryan and The Morning Show in the last 90 days worldwide

First of all, I am not sure this is an apple-to-apple comparison due to the difference in availability. Disney Plus is only available in US, CA, Australia, New Zealand and Netherlands. Even though Prime Video is supposedly accessible worldwide, while I was in Vietnam, I couldn’t watch many shows on the platform despite my membership.

Netflix said that even if Disney+ were global, the results wouldn’t be much different, citing the following result on Google Trends

I wouldn’t make that claim with such a degree of certainty. Netherlands is just a small country in Europe with about 17 millions in population. The viewership and interest in that country doesn’t equal to those worldwide.

Furthermore, the shakiness of the comparison can also come from the selection of keywords. Since The Witcher or Witcher is the name of a video game released in 2017, neither of the two keywords isn’t exclusive to the show on Netflix. Unfortunately, Google Trends doesn’t offer a feature that can clearly separate the show and the video game. The best that we can do is to filter the results by categories. I tested it out by comparing the keywords: Witcher, The Witcher,

As the screenshot shows, there is a big different between “Witcher” and “The Witcher”. The gap is even starker when “Netflix” is added to the search terms. If we set “Art and Entertainment” as the category, the picture will look a bit different

The Witcher/Witcher keywords had a spike on 21st December 2019, one day after the launch of the Netflix show while Mandalorian hit its peak on 28th December 2019, one day after the season finale. The difference between the yellow line and the red line is closer when we look at “Art & Entertainment” alone than when we look at “All categories” which may likely include the effect from The Witcher video game.

Now, the result above still doesn’t offer the full picture thanks to the difference in geographical availability, Let’s look at the US, two markets where every show is available

If we look at the United States alone for All Categories, it looks more favorable for Mandalorian. When “Art & Entertainment” is applied, it fares even better for Mandalorian

Here are the results for Canada

What about Australia?

My point is that there are several factors that affect how the search terms are presented on Google Trends and how results should be interpreted. I don’t have an idea on how the competing shows actually fare. I do believe that the way Netflix presented the information and data in its report is misleading at best.

Disclosure: I have Disney and Apple stocks in my portfolio.