If you think much of the comment in the last few days about Netflix's unimpressive results in the second quarter, you would be forgiven for assuming that the streaming giant's House of Cards will soon be tumbling down.
Netflix lost 126,000 subscribers in the quarter, the first time it happened since the streamer actually started producing original content. Yikes. And then when you connect that fact, plus quarterly lack of new hits and the upcoming loss of shows like Friends and The Office with the upcoming launch of rival streamers from Apple, Disney, and HBO's parent company – among other things – it's a recipe for disaster and whatever Streaming War version of hand-to-hand combat, with anyone taking a piece out of Netflix, right?
In reality, the future is probably much more luminous than these headlines from the last few days, suggests:
- CNBC : "Netflix only had its worst day for three years ̵
- CNN : "Netflix subscriber errors can be a blip – or a sign of difficult times to come"
One of the simple sinners to blame for Netflix rare second quarter On subscribers, the latest move in the United States of its standard plan is from $ 11 to $ 13. Indicate that the fact that it is actually a positive sign feels Netflix safe enough to raise prices in the face of the threat of a number of deep new rivals – if you are going to give Netflix to the price hike you must also do a similar thing to the rivals.
In other words, Netflix increased its prices, went quarterly with no new hits and subscriber growth was relatively flat (there were actually 2.7 million paid add-ons). For me, it is actually a signal that the new guys have little or no price flexibility when preparing to announce what they will charge subscribers, as Apple and WarnerMedia have not yet done.
Here is another way to look at the price increase:
WarnerMedia is in a particularly tough place on the price front. It is noteworthy that Netflix still has room to raise prices at this stage of the game, but many customers are already paying $ 15 per month to stream HBO. As WarnerMedia finds out how to praise its upcoming HBO Max service as lumps in HBO content, plus content from TNT, TBS, Warner's movie catalog and much more – how much higher do you dare to go over $ 15? Up to $ 17 or $ 18? There is sky-high territory for a streaming plan, especially with Netflix that has put customers' expectations on that front for too long. And besides – if WarnerMedia awards HBO Max of $ 18, for example, it means that the value they put on all the additions to the HBO Max package is just $ 3.
Meanwhile, another thing to consider about Netflix's quarter: How can the future after the 2nd quarter be so bleak, when less than a week after the end of the quarter, it was launched Stranger Things 3 to record viewers of 40 million out of 155 million or so accounts?
Anecdotally, there has been a consistent drumming of negativity regarding Netflix's ability to hold out hits. But not only Stranger Things goes a long way towards shooting that argument – let's also take a look at two things. Netflix assured investors during the second quarter's presentation, there are no plans to pursue: Gaming and Ads
- . There are mobile games related to Stranger Things and Dark Crystal: Age of Resistance but Netflix warned that: "Like our other merchandising initiatives, these games are designed to build fandom for our titles and not signaling a press in play as a new business for Netflix. "
Similarly, about the constant speculation, the company will eventually start running ads:" When you read speculation that we are moving to selling advertising, Be sure this is wrong. We believe that in the long term we will have a more valuable business by not competing for advertising revenue, and instead focusing on competing for viewer satisfaction. "
All this is not to say if things became so serious, Netflix couldn't just decide one day to turn a switch and pursue one or both of them at some point down the line. In another way, the company is often seen as in an existential crisis if subscriber numbers begin to slip, but it does not have to be the case.
The bottom line here is the future, still undoubtedly looks bright to Netflix, which is about to get some of the toughest competition ever had – albeit competition that will have an almost impossible time trying to match Netflix's subscriber base as well to find out their own pricing and content strategies.
Random End Tank:
As we mentioned above, it is remarkable that Netflix is still safe enough to raise prices at this stage of the game and barely sees a loss of subscribers from it. Especially considering what it knows, coming down the line from, let's say, HBO alone: A Game of Thrones prequel, Watchmen His dark materials and Westworld, to mention some upcoming titles.