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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
Not because of the price, but because of the lack of content.
This story is not about people leaving. It's about them not getting as many NEW customers as they thought.
Of all the streaming services, Netflix has the highest member retention.
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!
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).
That's the way it's always been for most people, which is how Netflix was so successful for its first stretch in the early 2000s. Only a minority of customers would receive and send back multiple DVDs each week -- most people would get some movie they were told was "awesome" and it would sit on a shelf for a month. I remember some comedian even doing a shtick about people who'd get all these "classic movies" from Netflix on DVD that they never would have been able to find at a local Blockbuster, but then they'd end up sending them back unwatched a couple months later.
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.
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.
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?