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Netflix Stock Price Tanks As Customers Quit Over Higher Prices (theverge.com)

Posted by BeauHD on from the more-money-more-problems dept.

An anonymous reader writes: Netflix released its earnings report (PDF) for the second quarter today, where it reported $1.97 billion in revenue and net income of $41 million. The company did however report only 1.54 million subscribers, which is below its projections of 2.5 million new subscribers. As a result, stock is down around 14 percent in after-hours trading. "Our global member forecast for Q2 was 2.5m and we came in at 1.7m. Gross additions were on target, but churn ticked up slightly and unexpectedly, coincident with the press coverage in early April of our plan to ungrandfather longer tenured members and remained elevated through the quarter," Netflix wrote. "We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering." The company defended its price hikes, writing that "while ungrandfathering and associated media coverage may moderate near term membership growth, we believe that ungrandfathering will provide us with more revenue to invest in our content to satisfy members, thus driving longterm growth." In the past, Netflix gained 13 million new subscribers in 2014, and 17 million in 2015. Comcast will reportedly allow Netflix onto its X1 platform, which may entice more customers to the streaming service.

28 of 460 comments (clear)

  1. The price hike is minimal... by myowntrueself · · Score: 5, Insightful

    The real reason for people leaving Netflix is the blocking of VPNs and proxies and the dull nature of Netflix original content.

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    In the free world the media isn't government run; the government is media run.
    1. Re:The price hike is minimal... by sims+2 · · Score: 4, Insightful

      IKR one of the things I hate the most is when they have missing seasons like season 1 2 3 x x x 7 x 9

      Its almost as bad when they have a series with missing episodes. 1 2 3 4 5 6 x 8 9 10 11 x 13.

      And why didn't anyone think to deinterlace star trek? its not the only one but thats a lot of screwed up episodes.

      --
      Minimum threshold fixed. Thanks!
    2. Re:The price hike is minimal... by chriskenrick · · Score: 5, Insightful

      Even more so in countries like Australia where our library is less than half the size of the US one. By blocking my access to other netflix regions, they're well on their way to losing another customer. I know it's the rights holders that are the issue, but the only language they understand is money.

    3. Re:The price hike is minimal... by Anonymous Coward · · Score: 4, Insightful

      The most rational solution to this idiocy? Torrent that shit.

    4. Re:The price hike is minimal... by Anonymous Coward · · Score: 2, Insightful

      Don't worry, it'll soon tank further as they'll require MS Edge to show 1080p content and that's just NOT gonna fly.

      They basically blocked people outside the USA, hoping we'll pay 80% as much for our local Netflix which has 20% the content, and now we lose 1080p too.

      In 2016, the new trend is having contempt for your users and screwing them as often as you can. MS is the best example here.

      Back to TPB/KAT/whatever! They only have themselves to blame for the lost revenue.

    5. Re:The price hike is minimal... by Anonymous Coward · · Score: 5, Insightful

      Netflix would love to have more content, and especially better content. Its Hollyweed wanting to create an artificial scarcity of content to keep licensing fees far too high that is the problem... If Netflix could double the amount of QUALITY content that could be streamed from them, few would care if the price doubled! The reason for the content disappearing and missing seasons or episodes are licensing issues. Hollyweed is too greedy and thinks that their content is worth far more than it really is worth. Hollyweed and their crap licensing terms and high license fees are why we don't see more quality content on all video streaming services.

    6. Re:The price hike is minimal... by Anonymous Coward · · Score: 3, Insightful

      Yeah, but see the thing is, nobody cares.

    7. Re:The price hike is minimal... by Man+On+Pink+Corner · · Score: 2, Insightful

      It's Hollyweed wanting to create an artificial scarcity of content to keep licensing fees far too high that is the problem.

      Funny, that doesn't seem to be stopping Amazon.

      Enough excuses from Netflix. Sign some deals, or go away already.

    8. Re:The price hike is minimal... by ranton · · Score: 5, Insightful

      Yeah all those ones you mention, I find pretty dull. Especially Dare Devil and Jessica Jones, normally I love action hero stuff but those just bore the pants off me. I tried Stranger Things recently, couldn't get past the first 30 minutes.

      Maybe I'm just strange.

      Even if you don't like these programs, the positive reviews from both critics and viewers objectively show they are quality content. If you had originally said you stopped watching Netflix because of dull original content that is your opinion, but claiming people are leaving Netflix because of that is simply objectively wrong. I'm not saying no one leaves because of dull original content, but clearly that is not a major driving factor.

      I find it more likely that emails notifying users about the price hike reminded people they were paying for Netflix when they were never using it. I've worked at two subscription based companies which avoided reminding users of their service like the plague since it only incited some users to cancel (I don't condone the practice, and yes one of the companies is bankrupt now).

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      -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
    9. Re:The price hike is minimal... by SuperKendall · · Score: 5, Insightful

      Unfortunately I find David Tenant utterly detestable.

      If that is the case then you REALLY need to see Jessica Jones.

      --
      "There is more worth loving than we have strength to love." - Brian Jay Stanley
    10. Re:The price hike is minimal... by Darinbob · · Score: 3, Insightful

      None of that is the fault of Netflix.

      The reason the stock is down is that the primary market is full of people who already cut the cord once and won't hesitate to do so again if given a chance. Meanwhile Comcast can ramp up their rates and most customers just put up with it. But sheesh, granfathered in for 2 years at $8/mo and it goes to $10 a month, and they get angry even though they used to pay $80 or more a month.

    11. Re:The price hike is minimal... by Darinbob · · Score: 5, Insightful

      Amazon is still a wannabe player in the market. It's big market segment is people already subscribed to Amazon prime, they're not getting a lot of new customers. Their selection is really terrible, and if there's something good then chances are you may have to pay extra for it above and beyond the subscription.

    12. Re:The price hike is minimal... by Man+On+Pink+Corner · · Score: 3, Insightful

      Their selection is really terrible, and if there's something good then chances are you may have to pay extra for it above and beyond the subscription.

      No, their selection is most definitely not "really terrible."

      But yes, you typically have to pay a couple of bucks to rent access to A-list movies for 48 hours. But at least you have that option with Amazon.

    13. Re:The price hike is minimal... by Anonymous Coward · · Score: 2, Insightful

      Subscriber to both Netflix and Amazon Prime here (and Lovefilm before it was merged into Amazon). Both have exactly the same problem, especially for more recent stuff. They'll usually each have different stuff too. Netflix actually tends to be the better one. Amazon Prime does have a lot more available if you pay to actually buy/rent it, but I don't count that since it's not included in your subscription and so it isn't much different to purchasing it through Amazon.

    14. Re:The price hike is minimal... by Dr_Barnowl · · Score: 2, Insightful

      Amazon have a ginormous online retail business to support their efforts to enter the market. It doesn't matter to them if they make a profit for a while, so they can overbid and make a loss.

      For Netflix, it's their core business.

    15. Re: The price hike is minimal... by Anonymous Coward · · Score: 2, Insightful

      Without ads isn't important to most people? I'll need a citation.

    16. Re: The price hike is minimal... by Cajun+Hell · · Score: 4, Insightful

      "Pause" is an even better time, though. And strangely, it's always exactly the correct amount of time, and happens exactly when you want it to.

      Ads are a surprisingly shitty time to do something else, because they don't happen on demand and don't happen for the correct duration. On top of that, they make annoying noise.

      --
      "Believe me!" -- Donald Trump
  2. It's A Bargain by JimSadler · · Score: 4, Insightful

    I pay $9.50 a month for Netflix and it is better than either HBO, Showtime or Starz. If they jumped up to $12. per month i would not blink an eye. Meanwhile my cable bill is $220. per month.

    1. Re:It's A Bargain by AJWM · · Score: 4, Insightful

      Food and gas, and even postage, are pretty much necessities.

      A video feed is optional. If you must watch something on a screen (rather than, say, read a book), most public libraries these days have pretty good DVD collections.

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      -- Alastair
    2. Re:It's A Bargain by lucm · · Score: 3, Insightful

      I agree with that. Also they started having incomplete series that get new episodes every week; when it gets to that point they're no longer in their niche of "a bit dated but binge-ready" and outside that niche they can't compete with HBO or even Xbox video.

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      lucm, indeed.
    3. Re:It's A Bargain by Anonymous Coward · · Score: 4, Insightful

      You make it sound like everyone's a sport nut.

      And you'd be surprised how much news you can get from the internet.

    4. Re:It's A Bargain by Rockoon · · Score: 5, Insightful

      So you now don't get any news or sports channels, how great.

      Not getting FOX, MSNBC, ESPN, etc is a feature.

      --
      "His name was James Damore."
  3. VPNs FTW? by Anonymous Coward · · Score: 3, Insightful

    Likely their crackdown on VPNs and foreign subscribers has also contributed somewhat to the churn.

    If they'd let paying customers, you know, be paying customers then maybe they'd be in a better position now.

    1. Re:VPNs FTW? by GuB-42 · · Score: 5, Insightful

      Likely their crackdown on VPNs and foreign subscribers has also contributed somewhat to the churn.

      If they'd let paying customers, you know, be paying customers then maybe they'd be in a better position now.

      Probably not their decision. Netflix would love not to have any regional restrictions. Content owners and governments have other ideas.

    2. Re:VPNs FTW? by bloodhawk · · Score: 3, Insightful

      Likely their crackdown on VPNs and foreign subscribers has also contributed somewhat to the churn.

      If they'd let paying customers, you know, be paying customers then maybe they'd be in a better position now.

      Probably not their decision. Netflix would love not to have any regional restrictions. Content owners and governments have other ideas.

      They always make the claim they are against regional restrictions and exclusivity, but it seems all talk, they actually participate in the exact same licensing an exclusivity distribution deals with there own content. Basically they seem against regional restrictions only when it is not in their best profit interests. I say that as someone that likes Netflix and is a subscriber (though will disconnect as soon as my particular VPN provider stops working).

  4. ungrandfathering? by sims+2 · · Score: 4, Insightful

    I seem to remember being told at the time that as a current subscriber I would be able to keep my current rate for a rather long period of time...ah yes here it is 5/9/14 "Hi user,

    In order to continue adding more movies and TV shows, we are increasing our price from $7.99 to $8.99 for new members. As a thank you for being a member of Netflix already, we guarantee that your plan and price will not change for two years.

    You can review your membership details at any time by visiting Your Account. As always, if you have questions, we are happy to answer them. Please call us at any time at 1-888-357-1516.

    â"The Netflix Team"

    So a bunch of people just forgot they had a very generous 2 year warning of a price hike and were caught unawares? I wouldn't call it ungrandfathering as It was a time limited price guarantee.

    Ungrandfathering is when the city decides your house built in the 1850's is too close to the road and must be demolished in 2016 dispite being grandfathered in on the new rules in 1975.

    --
    Minimum threshold fixed. Thanks!
  5. Re:I'm about ready to drop by Toonol · · Score: 4, Insightful

    You mean they're tricking you into not cancelling by producing interesting shows? Those bastards.

  6. Re:"It's the content, stupid" by grahamsz · · Score: 3, Insightful

    But you should be comparing "Amazon Prime" and "Netflix" since they are both all-you-can eat streaming services.

    I think you are comparing "Amazon Video" which is amazons premium pay-per-movie model with "Netflix" which is unfair. Are you suggesting that Netflix should offer the movies that Amazon offer for payment as inclusive in their all-you-can-eat plan or are you suggesting they introduce a mixed model where there are some premium movies on netflix?