Hollywood Strike: Netflix shielded by global crew, strong pipeline

Netflix is well-positioned to weather the Hollywood strike; strong Q2 programming, international production crew, ad-supported tier, and password-sharing crackdown are driving revenue and adding more users

Netflix investors will assess risks from the ongoing strike in Hollywood when the company reports quarterly results on Wednesday, but analysts said it was well positioned due to its solid pipeline of shows and international production crew.

Striking Hollywood actors have joined film and television writers on picket lines, forcing U.S. studios to shutter productions as workers battle over pay in the streaming TV era.

Some of the people on strike are also picketing the Netflix offices in Los Angeles. But the streaming giant, which is set to report its highest second-quarter subscriber additions since 2020, is likely to keep churning out titles such as Gal Gadot's upcoming Heart of Stone and Too Hot to Handle Season 5.

Netflix's international production capabilities are a "huge differentiator", and a lot of their content comes from countries that are not involved in the strike, analysts at SVB MoffettNathanson, Credit Suisse and Insider Intelligence said.

The company demonstrated that capability during the pandemic when subscribers flocked to shows created outside the United States, including the French mystery thriller Lupin and the comedy Call My Agent!, SVB MoffettNathanson analyst Michael Nathanson said.

Netflix is also not tethered to the parts of the entertainment business that are struggling, namely theatrical and broadcast television, Nathanson added.

In the past week, three brokerages have raised their ratings on Netflix's stock, while five have lifted their price targets.