Comments
afwriter
7/19/2016 12:50:58 PM
User Rank Platinum
The King Doesn't Want to Become the President
Netflix is too big to want to partner with other OTT providers and have to comply with outside decisions. I often times wonder how they can afford to continue to pump out so much original programming when their revenue stream seems fairly static. I think if something doesn't change in the future they may have a tough time staying on top, but for now their business model seems to be working just fine for them.
dcawrey
7/19/2016 1:59:13 PM
User Rank Platinum
Re: The King Doesn't Want to Become the President
I think the market is getting pretty saturated. Add in the fact that customers all have different viewing preferences and you can see where there might be a problem. Some people are going to end up paying more for OTT services than they ever would with cable because of all the various services. I'm hoping these services will be able to figure this issue out.
Adi
7/20/2016 4:49:10 AM
User Rank Author
Re: The King Doesn't Want to Become the President
@afwriter - first of all, what an awesome headline to your post. Love it!
I suspect Netflix will agree with you about their business model. It's working fine for them for the most, and one quarter isn't a trend. Even I wouldn't reccomend suddenly changing their approach. I just feel now is the time to start planning further ahead, when things are generally good, and their negotiating position is strong. If they have a string of disappointing quarters and the general perception is that growth is tapped out then it will be much harder. And, as you point out, the cost of content development is always hanging over the business.
elizabethv
7/20/2016 7:42:18 AM
User Rank Platinum
Re: The King Doesn't Want to Become the President
@afwriter - perhaps their business model isn't at all sustainable, and they know it but continue on anyway. Sure, that doesn't make much sense in the long run, but who's to say they don't have some kind of end game strategy in mind. You are right, all of their original programming costs money, and at some point, their income was going to hit a plateau. Unlike Amazon, who has the abilty to fray costs with income from other sources, Netflix doesn't haven't that ability. What would they offer with their movies? Delivery popcorn?
freehe
7/31/2016 2:50:44 PM
User Rank Platinum
Netflix Need a New Model
Nothing lasts forever. I think it is something that Netflix needs to monitor and they need to being implementing a plan for capacity management and future growth.
Althogh the market is satured Netflix is a leader and many of their customers are loyal despite prices changes and feature changes just like Comcast. Customers may complain about their service but remain as customers.
dlr5288
7/31/2016 5:46:44 PM
User Rank Platinum
Re: Netflix Need a New Model
YOu make good points!
I personally like Netflix, although nothing last forever and it wouldn't kill them to try something new. Especially with the new services coming out that grant things as Netflix does.
batye
8/2/2016 2:48:05 AM
User Rank Platinum
Re: Netflix Need a New Model
@dlr5288 this days every Co. trying to offer something simular to Netflix as everyone trying to cash in on the streaming trend...
faryl
7/24/2016 9:44:53 PM
User Rank Platinum
Re: The King Doesn't Want to Become the President
I wonder how much of the production cost is covered by the production company and how the value of Netflix's audience plays into it all.
(I have no idea how that all works!)
dcawrey
7/25/2016 3:13:02 PM
User Rank Platinum
Re: The King Doesn't Want to Become the President
I know Netflix is expected to gain significant growth via overseas markets. I would argue the only way it's going to succeed is via aggregation. It's too hard for a company like Netflix to know right away what shows certain markets will like – it will need data first.
faryl
7/25/2016 6:40:45 PM
User Rank Platinum
Re: The King Doesn't Want to Become the President
I wonder if that's information the content owners are able to provide.
elizabethv
7/31/2016 11:40:40 PM
User Rank Platinum
Re: The King Doesn't Want to Become the President
@faryl - I may not know specifically how it all works, but I am positive that even if the production company initially fits the bill of the production costs, they get a profit back from Netflix once it's aired. (Because no one in this country does anything for nothing.) I'm not sure how they determine what to pay for, since I'm sure they run the demographic gammit where their audience is concerned. Maybe it's similar to fast food, the more popular shows bring in the large audiences and make up for the cost of the shows that don't bring in as large an audience. So they can make a show like DinoTrux, because of the profit they bring in from Orange is the New Black. (In a franchise, the busier restaurants make up for the loss in profits from the struggling restaurants. In case you weren't aware.)
Shared accounts
I wonder if the ability to share a Netflix account has changed their subscribership rates at all. Do you know when they implemented the shared accounts feature where multiple users can access the same account under different aliases with content customized to their viewing habits?
Adi
7/20/2016 4:50:22 AM
User Rank Author
Re: Shared accounts
@kelsey - If I remember correctly that was 2013-2014, so a few years ago. I think that feature has been around for a while.
faryl
7/25/2016 6:39:14 PM
User Rank Platinum
Re: Shared accounts
I wonder how many of the users who do that would actually pay for a subscription otherwise.
There were articles floating around a few years back talking about HBOs views on account sharing & people pirating Game of Thrones in particular. I don't remember how it played into their business strategy, but I remember that HBO wasn't overly concerned about it.
(I'm pretty sure it limits the amount of devices that can access Netflix at once from each account, which probably helps keep the amount of account/password-sharing to a controllable amount)
mhhf1ve
7/19/2016 8:42:56 PM
User Rank Platinum
Hard to believe...
I find it hard to believe that Netflix hasn't considered its growth rate possibilities. The US market is going to be saturated at some point, so Netflix can only really add subscribers in other countries for growth... and then that growth rate will saturate and flatten out, too.
In the future, Netflix has to start acting like Disney and HBO, but that might be tricky if Netflix is both a distributor and a competitor at the same time. However, Comcast is already in the same kind of position now (although with a much stronger distribution position than Netflix).
elizabethv
7/20/2016 7:35:07 AM
User Rank Platinum
Is it good to be king?
I'm not sure that Netflix hasn't run out of runway, but I am sure they still have some fight in them. There was always going to be an end, there always is. Though it seems to have happened pretty quickly. Other's caught on to what Netflix was doing, and wanted their share of the success. They will undoubtedly see some increase with their rollout of all the Disney Movies in September. Heck, I'm excited about that. No matter what, Netflix will always hold a tight grasp in the OTT game, even if they aren't always the king.
clrmoney
7/20/2016 11:30:15 AM
User Rank Platinum
Net Flix Business model
I don't thing they need a new business model because everying seems to be going great to me ith over a million subscribers. Maybe they are trying something different that will be better for them.
vnewman
7/20/2016 11:56:04 AM
User Rank Platinum
Re: Net Flix Business model
Growth may have slowed, but growth isn't everything - revenue is still through the roof - they eared 41M last quarter which is a 57% increase from the same quarter last year.
Ariella
7/20/2016 12:35:09 PM
User Rank Author
Re: Net Flix Business model
@vnewman excellent point! A lot of companies boast a great deal of growth when they're starting out but have very little revenue. A business also needs money to come in to sustain itself and, of course, make money for the shareholders.
Adi
7/20/2016 12:53:40 PM
User Rank Author
Re: Net Flix Business model
@vnewman - Absolutely; net income grew and EPS were well above expectations. They are doing a fantastic job controlling costs, and seem genuilnely optimistic about ramping up profitability sharply next year. But I think top line revenue was below analyst expectations. That may have contributed to the share price falling, though I think investors were more concerned with the subscriber growth numbers. That net adds number is seen as the engine for future growth and if investors believe it is starting to lose steam...
elizabethv
7/22/2016 9:50:01 AM
User Rank Platinum
Re: Net Flix Business model
@vnewman - you're right, they are still bringing in a pretty penny. At some point they had to expect growth would slow and potentially even stagnate. I'm sure there are a few smaller OTT services that would love to be in the position Netflix is in right now.
dlr5288
7/26/2016 12:07:37 PM
User Rank Platinum
Re: Net Flix Business model
I agree!
I understand that they want to gain more subscribers and reach more people, but they're doing great!
mhhf1ve
8/1/2016 8:57:30 PM
User Rank Platinum
Qwikster?
Nobody seemed to notice that Qwikster appears to be alive and well -- but with a much better name. DVD.com is humming along smoothly with DVDs in the mail, and a wider selection than any other streaming service because of the First Sale Doctrine.
It's amazing that DVDs for movies are still made.. since streaming seems to be where the continuing revenues are. Copyright holders have to rely on scratched discs for another DVD sale, but renewing streaming rights (with bids on exclusive licenses) happen as frequently as lawyers can negotiate the terms.
batye
8/2/2016 2:39:34 AM
User Rank Platinum
Re: Qwikster?
@mhhf1ve interesting observation... as in my city some area do not have internet, only basic dial up and Ma&Pa stores still rent and sell Dvd's ...
mhhf1ve
8/4/2016 5:12:26 PM
User Rank Platinum
Re: Qwikster?
FYI - Blockbuster video still exists in remote parts of the US, too... like Alaska.
batye
8/4/2016 11:57:12 PM
User Rank Platinum
Re: Qwikster?
@mhhf1ve interesting to know... but my town 120 km away from GTA Toronto and it still like rural area... sad reality
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