Stratechery's latest on Netflix has a couple of issues while getting the most important part right, ie. that Netflix has been nimbler than the competition:

That (Netflix) debt totals $14 billion; Warner Bros. Discovery, meanwhile, has $50.4 billion in debt, Disney has $45 billion, Paramount has $15.6 billion, and Comcast, the owner of Peacock, has $90 billion. None of them again, in contrast to Netflix are making money on streaming, and cash flow is negative. Moreover, like Blockbuster and renting DVDs from stores, the actual profitable parts of their businesses are shrinking, thanks to the streaming revolution that Netflix pioneered.

Issue #1: Content Amortization

The first big miss is the misunderstanding that Netflix's content amortization targets accuracy rather than conservative tax-friendliness:

If Netflixs old content held its value in the way I once assumed then you could make a case that the companys customer acquisition costs were actually decreasing over time as the value of its offering increased

What Netflix actually does is take a page out of John Malone's playbook: amortize / depreciate aggressively to reduce your tax bill and instead spend that money on expanding your asset base. For Malone, this was acquiring cable TV operators back in the 70s / 80s / 90s, while for Netflix this is adding to its content library.

The 2022 10-K notes that their auditor is unhappy with their amortization, which shows how much they are leaning on the numbers.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

Issue #2: Content Evaluation

The other miss is evaluating content by an aggregate "win rate", eg.

When I was at Amazon Studios and we were competing with them day in and day out, the assumption you wouldve made in 2015, '16, '17 would be that the Netflix of 2022 would be much better at making content than it seems to be. That their batting average would be much higher. Why? Because theyve spent $70 or $80 billion since and I think were starting to feel the consequences of [not being as far ahead as expected].

While huge hits are great for marketing, the central import for streaming is simply whether any given production earns more than it cost. This gives rise to "strange" statistics and observations. Namely, that for any given individual Netflix user, two propositions hold: (1) most of the content is junk, and (2) there is also enough to watch.