Extra Fees – Probably Coming Soon to a Netflix Near You!!!
‘our growth is slowing down, while our content needs / cost is increasing’ ‘we need more of the monies’ ‘oh i know… let’s like… add new charges for stuff’
Netflix Inc. added 1.68 million subscribers in the second quarter of 2016, falling short of its own forecasts as higher prices for some older customers spurred an increase in cancellations.
The company added 1.52 million new customers overseas, compared with an April projection of 2 million, the company said Monday in a statement posted on its website. Netflix also added 160,000 in the U.S., bringing the company total to 83.2 million. The company had predicted about 500,000 new domestic customers.
Chart from Bloomberg.com comparing Wall Street’s estimates for Netflix subscriber growth versus the actual growth numbers that just came in.
I think we should all expect to see Netflix diversify its revenue base after missing its subscribers numbers by such a wide margin.
My thinking is with such a strong negative reaction from the stock market, with analysts constantly pestering executives about their growth numbers, and with increasing content acquisition and creation costs… I can’t help but think there’s so much pressure on Netflix that they’re going to try to increase their revenue numbers in one way or another.
Whether that’s through the introduction of paid streaming rentals, pay to view original content, extra services like a ‘download archive’ for offline viewing… I think we’re going to see something.
I wouldn’t be surprised if Netflix actually ended up creating a ‘super premium streaming‘ account that allows access to HBO shows or offers the entire Criterion Collection… for, say, $30 a month. An account like that would certainly offer film buffs a lot of value. I could stop having to flit between Amazon Prime, Hulu, and Netflix to get what I want.
If you can’t see the image, it’s a chart of Netflix’s different streaming subscriptions. Monthly price: BASIC $7.99 STANDARD $9.99 PREMIUM$11.99
We already see this sort of account differentiation at Netflix with their Basic, Standard, and Premium streaming services. However, the differences in those accounts doesn’t lie in the content offered but in the technical add-ons (like how many people can be watching simultaneously). So adding a super premium account or creating more add-ons fits pretty neatly into their established business strategy and technical capabilities.
To Sum Up
I can’t predict the future or tell you what’s actually going to happen… but… My feeling is that Netflix will either introduce more add-ons for more money or start offering a wider / better content selection for more money… Organic growth is going to be tough for Netflix from here on out.
With the EU implementing a content quota, with Netflix needing to find content for every single one of its 130 new markets, and with US subscriber numbers beginning to top out… don’t be surprised when Netflix comes up with ways to get more of your money $$$.
Netflix is doing just fine – Update 2/1/2017
So… Netflix is doing just fine! They have more money than ever, more original content than ever, and more subscribers than ever. I don’t get the impression that they’re going to need to raise fees anytime soon.
And what’s even better for Netflix is that apparently EU countries have been a little too distracted to demand more local content on Netflix. I imagine the rules / orders are stuck somewhere in the bureaucratic factory that is the EU.
There’s a two-year limit on negotiating Britain’s exit from the EU and if the devalued pound stays at current levels until the exit, that’s good news for U.S. companies looking to shoot in the UK and could see a rise in acquisitions of British companies. It still remains unclear whether UK productions will stop receiving funds from EU arts programs such as the MEDIA program (MEDIA co-funded, for example, Ken Loach’s Palme d’Or winner I, Daniel Blake, which is up for five BAFTA noms this year) and whether UK TV and film productions will be eligible for the European content quota system, which is the backbone of many Euro productions.
