January 13, 2022
Summary
Netflix has a Data Monetization Index (DMI) of 3.20% compared to 2.63% for ViacomCBS and 1.41% for The Walt Disney Company. The DMI calculation is based exclusively on subscriber data valuation for streaming services. Netflix’s somewhat higher DMI is driven by its higher subscriber counts, lower churn rates and the fact that it is a pure-play streaming service.A higher DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a later blog.
Summary
Netflix has a Data Monetization Index (DMI) of 3.20% compared to 2.63% for ViacomCBS and 1.41% for The Walt Disney Company. The DMI calculation is based exclusively on subscriber data valuation for streaming services. Netflix’s somewhat higher DMI is driven by its higher subscriber counts, lower churn rates and the fact that it is a pure-play streaming service.A higher DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a later blog.
Definitions
- Data Monetization Index (DMI) = Data Valuation / Enterprise Value
- Data Valuation = Subscriber Data Valuation + Employee Data Valuation + Movie Data Valuation + Real Estate Data Valuation + Other Asset Valuation (this exercise uses Subscriber Data Valuation for streaming exclusively)
- Enterprise Value = Equity Value + Long Term Debt - Cash, a key metric used in the investment community
Methodology
The YDC team recently published a DMI for major Movie & Entertainment companies in the United States. Here is an example for Netflix along with a benchmark that includes ViacomCBS and The Walt Disney Company.
The data valuation is based on the latest available subscriber data for streaming services and relies exclusively on publicly-available data sources. For example, streaming subscriber counts and monthly churn rates were estimated at 214M (2.5%), 47M (5.9%) and 179M (4.3%) for Netflix, ViacomCBS and The Walt Disney Company respectively.
The total value of data will likely be higher once additional datasets relating to employees, movies and real estate are included. In addition, both ViacomCBS and Disney have sizable businesses outside streaming that have not been included within the data valuation. For example, Disney also owns traditional cable networks including Disney Channel and ESPN in addition to Disney Parks, Experiences and Products. Going forward, we will be working to make the data valuation more real-time.
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