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Netflix Stock Price Tanks As Customers Quit Over Higher Prices (theverge.com)
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.
The real reason for people leaving Netflix is the blocking of VPNs and proxies and the dull nature of Netflix original content.
In the free world the media isn't government run; the government is media run.
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.
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.
Pay attention to the summaries, you nitwit!
"I don't know, therefore Aliens" Wafflebox1
people left due to there shrinking library months of the same stuff may 1 or 2 new movies etc. yes they do do original stuff most of it pretty good but once you put it out people see it theirs no retention left. and as some people said blocking them from viewing threw vpn etc.
Not because of the price, but because of the lack of content.
Netflix is at $85 after this big after-hours drop. On June 27, they were...$85.
Technical traders (the ones who use charts to predict, no matter the news) will buy like crazy tomorrow.
You are welcome on my lawn.
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!
Darn! I wish I was a customer so I could quit too.
December, when I made my annual "where the hell is my money going" study, realized Netflix had nothing I wanted to watch. Except for House of Cards, but considering I could get the DVDs 6 months later for free from the library kinda made the decision easy.
People are bailing on Netflix due to content restriction and the killing of VPN. Still more economical than YouTube RED!
and I didn't quit, but I cut it back. Honestly I could cancel the dvd plan and wouldn't notice, but certain members of my family insist on having it (even if they barely use it, go figure).
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Retirement funds are buying most of the tech stocks. Some of them have the problem that they have another billion dollars every week that they have to invest in tech stocks and there just aren't that many good investments so they dump it into well know tech players. It is even worse in the UK where one type of high growth fund only allows investments into 200 companies that are registered in some government scheme. Some of their stock prices seems to have nothing to do with any type of value.
Is fear and greed. The fearful will be selling into unnecessary mania, created by an after-hours market with questionable liquidity. The whole "event" is a designed opportunity to create trades. The market profits with the increased volume. The event becomes news and the media gets their share. The market makers make it on the spread and volume. The sharks get fed by the minnows. The institutions filter-feed on the buying opportunity created by shaking out of the fearful.
And so it goes until the "next" news opportunity arrives for the news to sell.
Quite honestly the chart shows a strong long that the institutions will surely be happy about. But what do I know?
09 F9 11 02 9D 74 E3 5B - D8 41 56 C5 63 56 88 C0 45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
The real reason for people leaving Netflix is the blocking of VPNs and proxies and the dull nature of Netflix original content.
These are valid points to some extent. Netflix's original content isn't that bad, but the fact is that they were formed as a content distributor, not a content producer. And that's the real problem... they have no content to distribute. Netflix has jack shit to watch, whether you have a working VPN or not.
This really hit home about 5 minutes ago when I ran across http://www.cinesift.com/ via a link on HN. Look for the red "Netflix" buttons and you'll see maybe one or two in the first several dozen listings. Those are among the highest-ranked films of all time, across numerous genres. Almost none of them are available on Netflix. Meanwhile, Amazon Video lets you access almost all of them.
If Netflix is going to survive, they cannot simply rely on offering a pathetic assortment of B- and C-level movies for a flat rate of 12 bucks a month or whatever. What they are doing is not working, and it's time to stop trying. They have to start offering optional premium content. I see no other strategy that will keep Netflix from being destroyed by more clued-in players, including but not limited to Amazon.
They do have great content, but for Sense8 I gave up after that scene where they zoom on a dirty dildo. I'm all for creative freedom and I appreciate that they depicted all kinds of lifestyles, but that scene was just a cheap attempt at creating some kind of buzz. I don't mind graphic scenes but I do mind feeling like my "queer sex tolerance threshold" is tested on purpose, I find that insulting and condescending.
lucm, indeed.
Whether you raise my rate because of an "impending new price increase" that you disclaim or "the completion of two years of grandfathering," the result is that you are requiring me to pay more now, so it is the same either way for the consumer, duh. Of course the price increase is minimal and not my main reason for cancelling service last month, but it surely doesn't improve my experience. I cancelled my account mainly because Netflix is soooo ungodly slow to add new content, and I have long since burned through most of what I was initially interested in (I'm picky and don't just watch everything that is available). It also doesn't help that the interface on my Android media box is so incredibly awful with a remote, but it is more about the lack of stuff I want to watch.
If I really want to dig to find something unspecific, I have an Amazon Prime account, albeit mainly for other reasons. I'm mostly content with free OTA TV, Prime, and an occasional torrent or Redbox rental, and I subscribe to Sling TV during the NBA season. So Netflix, if you don't give me any compelling reason to subscribe to your service anymore, I won't. AT&T (evil) now suddenly enforcing limits on my downstream traffic sure doesn't help your case.
This is a hacked account, for which the owner can not be held responsible.
not because of price, I'd even pay $15 per month but because they blocked my VPS/DNS service. So I cut off their access to my CC. Guess what I don't even miss it. The kids had a hissy fit but I told them hey go ahead and pay for it yourself and all of a sudden no one cared at all to have Netflix.
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
That makes me feel MUCH BETTER. Their prediction of growth was much too high, but now they're predicting their other predictions will be much more accurate.
This from the company that brought you Qwikster... "The worst product launch since New Coke"! Launched in the tenth paragraph of a blog post from the CEO apologizing for some previous poor communication.
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
Know who else has that "problem"? Warren Buffett and Berkshire Hathaway. Something like $3 billion in cash arrives in Omaha every month for redeployment. But as a master capital allocator, Buffett is happy to sit on cash until something attractive crosses his desk, i.e., no overvalued "tech" companies.
Unfortunately, the macro pattern over the last few decades has been boom-bust as easy money leads to stupid, short-sighted exuberance for shares of mediocre businesses with owner-unfriendly management (hence the non-GAAP bullshit and stock-based compensation that's somehow not an expense).
The adults in the room endure the pain of sitting on cash -- QE and the central bankers certainly make it hard -- before the the bubble de jour implodes and the markets crash back to reality. But after the party is over, patience is rewarded with bargains for shares of businesses with real, enduring, high-quality profits. Think of it as time and personality arbitrage.
So they make 2% profit. That is pretty pathetic. how is this sustainable? Their costs are so ridiculously high, that if thier income falters for a second they would need to declare bankruptcy.
Troll is not a replacement for I disagree.
"our plan to ungrandfather longer tenured members"
Could someone explain this for the foreigners in the audience? I'm guessing Netflix don't come round and kill gramps if you're late with the payments but it's a doubleplusodd addition to the Newspeak vocabulary.
There's a Fairport Convention album called Unhalfbricking (something to do with walls?) but I don't think that's connected.
You've answered your own question.
If absolute power corrupts absolutely, what does this say about renewable power?
My TV broke, so screw it.
Exceeding the recommended torque is not recommended.
The way I see it, subscribing to netflix is very much like adding say HBO family of channels to your cable. You get a limited selection of content (when I search for a show I want to see on Netflix, I succeed about one time out of every eight-nine attempts) on both, and both give you a streaming app for the web browser or tablet. Big deal. Nothing special. And Netflix doesn't provide any content related to day to day news or say sports.
It was the effective geoblocking and the fall in content that caused the people I know to quit their service.
Netflix get this!
I speak for myself. But perhaps other consumers might have similar expectations.
I hadn't the slightest objection to his spending his time planning massacres for the bourgeoisie... (P.G. Wodehouse)
I have cancelled my Netflix subscription because of the price increase, but more specifically, I rarely use Netflix these days. I'd spend months not watching Netflix, it seemed a little pointless to spend more on something I'm not using.
The price increase just means that I'll subscribe to it when there is something to watch. Seeing now that I won't even check Netflix to find something to watch because I won't have a subscription, that seems unlikely.
Change is certain; progress is not obligatory.
Season 3 of Bojack Horseman. Can't wait to binge through it! Admittedly, it has been a while since I've watched anything on Netflix (or anything else on TV), so that maybe part of their problem too.
I deleted mine after the VPN witch hunt. The Canadian Netflix had nothing of value to watch. Maybe updated with new stuff quarterly. Any time I searched for something they didn't have it. Went back to torrents.
Seattle has the early adopter problem. We got full Mbps DSL before most of the country but now aging equipment and wiring means that original 1.5 Mbps we had originally no longer often works. I have ISDN at home, and the per minute charges suck.
Its not just early adopter problem.
Its also that the city forbids upgrades.
In the free world the media isn't government run; the government is media run.
Why does anyone want to get this content from a middleman? What's wrong with Netflix selling you only the "Netflix original" shows, NBC selling you theirs, HBO selling you theirs, etc? There's no reason anyone should want to get Hollywood's show from Netflix or Amazon. It's just going to be marked up. You have The Internet now!! You can communicate with anyone. Deal direct.
Turns out there's answer to the above question: because most people are still using these stupid proprietary applications, instead of standard interfaces, to watch TV. So if you personally had a dozen TV vendors, then you'd have to switch between a dozen apps, and that's going to totally suck no matter what. Even if someone's app is ok (and that's usually about as good as they get, huh?) you still can't have Netflix shows on the same alphabetical menu as Amazon and HBO shows.
(Unless you pirate, because once the content is liberated, it has a standard interface, which means you can pipe to any interface you want.)
So fuck 'em. Standard interfaces or else No Sale. (And seriously: is a standard interface such a burdensome thing to ask?! Can you think of any endeavor where it's not considered both the ideal and the common-sense way things should be?) If a vendor can get onboard with doing things right, they can get paid.
But if they say "use my software" (sometimes disguised as "use my box" or "use one of these supported devices" but we're computer people so we know this hardware is just for running their shitty software) then they are trying to create one of two futures:
Both are absurd dystopias that you can't possibly want. Netflix is currently just changing their blend between these two hells, and I guess people were used to the devil-they-knew. But what you don't hear anyone talking about, is Netflix actually trying to solve the problem, because nobody's making them do it. So stop paying them until they'll sell you the .mkvs. (Or standard streams, if you're convinced that local storage is just too .. expensive? Ok, whatever, an argument for another time.)
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Is it even a price hike, after being adjusted for inflation?
Competition Good, Monopoly Bad.
Are they just assuming people canceled because of increased price? Because that assumption might not be entirely right.
I recently canceled my Netflix account, but price did not factor into my reasons. In terms of the service you get for the dollar, Netflix could have doubled their price and it would still be a very good value.
as I'm the one who showed them how to.
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
"Invisible hand"?
BWAHAHAHAAA
I'm thinking about a 6 month or so "cancel" vacation like I do with HBO Now. Once you've binged through everything you want to see there's really no good reason to just let it keep auto billing. The fact that they're increasing the price without increasing the value makes it all the more attractive.
My subscription price didn't go up - people that had lower prices because of grandfathered rates that expired saw their subscription price rise to what everyone else pays. That doesn't really seem like a price 'hike' as much as the end of a discount.
The reason??
The good stuff is going away and what's left is crap MST3K wouldn't even send up.
The problem with Netflix is market fragmentation which is due to content creators and licencing. The more original content they make the better. When Netflix was totally dominant it wasn't so bad as either you had a licensing deal or you did not. Now that every telecommunications company is trying to pimp their own "streaming service", they shop around, or have exclusive deals to try to attract users.
The impending release of the New Star Trek is a perfect example. The entire world gets in on Netflix. Oh except in the US where the licence is owned, or in Canada where the thing is being filmed. In those countries, you have to use the CBS streaming service whatever the hell that is, and in Canada you have to use the Bell streaming service.
Kick. in. the. balls.
Personally, it isn't a big deal as I *also* have cable, and it will be showing on the Space channel which is Bell owned. However it is the principle of it that pissed me off. Before I saw that I could watch it on a channel I already get (hence I will Tivo it), my thought was, if ever there was content to pirate and screw the content creators and have no moral objections to it at all and no sympathy to anyone for anything it would be that. Just such a jerk move.