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Netflix Flexes
- iambateman 8y agoI’ve said this before, but I expect Netflix to continue to flex their muscle until they have an average subscription cost of $35-40/month. There’s so much room in the entertainment market for them to save customers $50/mo, offer them more, and increase their revenue.
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- Phenomenit 8y agoI would never pay more than the 10€ I pay now if the content quality and quantity they have at the moment persist, especially for us non US subscribers. Also I doubt they can keep it up, soon they and Amazon will go through all the culture written down and then what?
- orev 8y agoThe market is on its way to fragmentation as more content producers move to have their own apps instead of going through an intermediary. And they all want $10-$15 a month. It won’t be long before people refuse to pay for more apps, as the total cost of both the Internet connection and all app subscriptions surpasses the price they used to pay for cable. That is what limits the price any one app can charge.
- Pharmakon 8y agoI think you’re right, and then we’ll see a cycle of renewed piracy, followed by the grudging realization that making some money is better than making no money. It took a while to crack the music industry, but the same inevitable forces are ultimately at play here.
- 40acres 8y agoFor most casual consumers piracy is an inefficient way of getting content, even in the hay-day of piracy I'd bet that most consumers were getting their content via normal channels. A slight uptick in piracy may occur for the technically minded, but most consumers will pay for the convenience of streaming.
- Pharmakon 8y agoThings like Kodi boxes and steaming piracy sites have really changed the landscape. I find that many pirates today are not technical, might not know what bittorrent is, and find the whole experience to be roughly like any streaming service.
- quicklyfrozen 8y agoIt's arguably a better experience if you don't need to be aware of which platform each piece of content is streaming on. And I'd rather see IMDB ratings then the rather meaningless "this is a 92% match for you."
- paulie_a 8y agoI find piracy to be faster in many cases. Between a nzb downloader and a Kodi plug-in with a drebid service I'll be streaming something just as fast as you don't find it on Netflix.
- AdrianB1 8y agoYou would be amazed to know how piracy became consumer grade in the past few years; I heard about streaming sites from non-technical people that were watching their favorite shows there because there was no official way to do it otherwise. Outside top 2-3 markets, most online streaming services have a serious delay that is no longer accepted by consumers, so they turn to piracy. Why wait 1-2 years to see the last episode of Game of Thrones on official channels when you can see it next week on pirate sites?
- BurningFrog 8y agoYeah, they all want $10-$15 a month, but I doubt many will get it. We'll see.
- deathanatos 8y agoPerhaps. But we just recently tried CBS's streaming service, and it was terrible. AFAICT, only 720p, and the encoder they used appears to have had the quality set to "potato" (blurry, tons of what look like interlacing jaggies during rapid motion). It made me really appreciate how good of a job Netflix is doing on the technical side of things.
- orev 8y agoI have not seen it myself, but CBS is the clear loser of all the apps. They seem to be trying to build a pay service on the back of Star Trek (maybe they think the Internet is just for nerds?) and everything else they have is free content OTA anyway.
- FiveSquared 8y agoYep, besides, why not just watch the OG Star Trek reruns (if they still do that, I don’t really follow Star Trek anymore) or pirate if the app is so crappy? And OTA.
- ClassyJacket 8y agoI can't really agree with that. Their 1080p content doesn't look anywhere near as good as a BluRay, and their 4k is indistinguishable from 1080p. I'm often frustrated with the compression artifacts and colour banding, especially on low contrast frames like dark scenes or fade ins from black.
- ballenf 8y agoFor me Netflix isn’t competing against cable (its been 15 years since I subscribed) but against YouTube and small mobile games that I can play a few minutes here and there. In that light they are already a little too expensive for the value to me for a yearlong subscription. Instead I’ll subscribe for a few months and then cancel when I realize I’ve been paying without watching anything for weeks.
- pbhjpbhj 8y agoThere was a story on HN a week or so ago about Netflix's main competitor being Fortnite.
- zaroth 8y agoI can speak for myself, at that price I need to get live streaming as well as on-demand.
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- adventured 8y ago> until they have an average subscription cost of $35-40/month That's impossible. 3/4 or more of their total customer base for the future is outside of the US. The economic middle 50% and the top 50% of people in Brazil, Indonesia, India, Turkey, Vietnam, Thailand, China, Nigeria, Mexico, Colombia, Russia, Bangladesh, Philippines, Ethiopia, and about 140 other countries - can't and will not pay an average of $35-$40 / month (or say ~$25-$30 if we're assuming an average lifted by higher prices in affluent nations; that requires eg the US market to pay far higher prices beyond $35-$40). Not under any circumstances will any of that happen. Netflix will be able to raise prices in the non-rich markets (ie most of their customer base of the future) only as economic growth allows for it, both at the global and local levels. Customers in Brazil aren't going to suddenly be able to jump from $5 / month to $25 in the next ten years, no matter how much good content Netflix puts up. Western European customers, who could largely technically afford $35-$40 per month, will never accept those prices. Netflix is pushing near the edge of what people will pay right now globally. They can maybe raise prices in the US another 25% over several years before hitting the ceiling in their most lucrative market. The US market represents a rough approximation of their maximum pricing power. There's no scenario where they retain their customer base in the US and charge $35-$40 (unless we're talking about 50 more years of inflation).
- magicalhippo 8y agoI doubt that. Keeping subscription cost low means people will not view it as a huge expense and are much more likely to keep the subscription rather than cancel it, even if they use it very little. There's a line though, where it moves on over into the high-enough-to-notice expense category, where people will be much more inclined to cancel if they're not using it significantly. If Netflix had cost me $20 or more a month, I would have cancelled it long ago, and only subscribe for a month a year to binge. I'm betting Netflix want to stay in that first category for as long as they can.
- bonesss 8y agoI think tiered pricing makes more sense at that level of subscription. Netflix is global, so at some level their product and pricing has to reflect what the "lower middle class" in Turkey, China, and Brazil can bear. We know that cable providers have succeeded in getting more for less in this market, so Netflix could profitably charge more for more in some regions. I would guess that divide can't be reconciled, but by launching another layer of content/service at a higher price-per-month could let them maximize revenue. Netflix+ or something, paired to exploit some newer technology that isn't central to other services...
- thirdsun 8y agoAnd one way to get there might be live sports. The money I throw at Sky Germany to be able to watch Bundesliga (football - don't call it soccer.) is ridiculous - I'd be happy to spent a fair share of that amount to watch it via Netflix. I'm currently subscribed to DAZN, a european live sports streaming service that covers all kinds of international sports and leagues and for 10 € monthly the available content is stunning. Having that content on Netflix would be very welcome, particularly due to their better streaming technology which is very important when it comes to live streaming.
- chinathrow 8y ago"Netflix is so confident in its position it is effectively stating that if customers choose to watch TV, they will choose Netflix." That is, until they stop choosing Netflixt. I cancelled my Netflix account a week ago after finally realizing what a huge time suck it has become in my life. I know I'm just one data point but I'm pretty sure others will come to that conclusion eventually.
- matwood 8y agoSo you stopped watching television style entertainment? That’s a great change if so, but I’m not sure I see that happening on a wide spread basis anytime soon.
- general8bitso 8y agoIt is an anecdote, not a generalization.
- notatoad 8y ago>I'm pretty sure others will come to that conclusion eventually people come to that conclusion all the time. It's not new, and not something unique to Netflix. I don't see any reason why people would stop watching Netflix at higher rates than they have stopped watching any other TV format in the past 50 years. People like watching TV.
- p33p 8y agoI imagine you could say that about most things you spend your time on. Reading books? Huge time suck. Playing games? Huge time suck. Watching videos? Huge time suck. I think Ben explained it well in his podcast related to this. When people have $200 a month budgeted for entertainment, the marginal cost of a Netflix subscription isn't that much especially given the amount of potential content the service can have. Ultimately it depends on what you want to spend your time on, but I'd argue most want some form of entertainment, and Netflix fills that role for a lot of people.
- wutbrodo 8y ago
- general8bitso 8y agoI have been a Netflix subscriber for over 5 years now, but seldom use it anymore. Most streaming is via Hulu (commercial free) or Prime in our house nowadays. I don’t have children, but I could see how having the Disney catalog would be enticing to parents of young children. Also, strange the article did not mention Fortnight, by name, as a competitor.
- notatoad 8y agoThe article did mention Fortnite by name. It's at the end.
- general8bitso 8y agoThank you. Not sure why I missed that.
- adwf 8y agoI honestly don't think a Disney streaming platform should scare Netflix that much. You can get the entire classic Disney DVD back catalogue for ~£200, why would parents buy a streaming service for £10-20/month for years on end? And that's the whole classic catalogue - when you bear in mind that kids will happily watch the same old Frozen DVD over and over again, I don't see it as a huge compelling offering. Even adding all of Marvel, I still believe people will prefer to pick and choose their favourite individual media over an expensive subscription. It's the continuous flow of new and unique TV/movies that is really working for Netflix. Disney just don't output anywhere near the same content hours to make a subscription worthwhile, and kids probably wouldn't care even if they did.
- untog 8y agoDisney owns ABC, Marvel Studios and Lucasfilm. Not mention ABC Family and existing Disney cable channels. Between those assets they could make a very compelling streaming service. Something Netflix knows well since they were leaning hard on Marvel shows for a while.
- jrnichols 8y agoThe article made a great point about TV Everywhere and the inconsistency of app logins. This is something we encounter with apps like the History Channel app, for example. it wants us to log in, go to history.com/activate, but doing so brings up a blank screen or some bizarre error message. I've been trying to authenticate with DirecTV Now, which should be supported and is on the list, but it just sits there. Is it a problem with pihole? unlock origin? Safari? Tried Firefox and Chrome, and same issue. Not a good user experience. Logging in with a friends credentials for a tv provider she cancelled over a year ago still worked, oddly enough. Netflix has been way more attractive, even with the slight price hike. Hulu as well.
- WorldMaker 8y agoSomething that bugs me a slight bit in the TV app diaspora was that one of the original Hulu mandates back when it was a GE project was to be a strong software provider for TV frontends and backends; that as much as Hulu would be a thing itself there'd also be "Powered by Hulu" opportunities to avoid every TV app having an entirely different experience or missing some should-be standard backend/frontend features. It shouldn't be a surprise that that original vision was somewhat lost when Comcast bought NBC/Universal and gained a huge stake in Hulu, but it's still a shame that we don't have more "powered by Hulu" apps per that original vision. I still don't understand why NBC/Universal's Seeso attempt wasn't "powered by Hulu" given how central NBC/Universal was as a Hulu content partner (nor why Hulu didn't just inherit the majority of Seeso content when they got bored with the experiment), and that's a large part of why I didn't bother with Seeso. I guess I'm still often angry at the CW for dropping Hulu support for their own app which is just full of technical papercuts that Hulu fixed a long time ago; I would mind the CW app less (even if it was still a separate app) if it was at least "powered by Hulu" and had some of the backend streaming tech improvements, UX improvements, and commercial volume smoothing tech that Hulu uses. Disney+ supposedly is using backend tech/knowledge from ESPN+, so it won't be entirely from scratch, but with Disney now being majority owner of Hulu, again it seems a shame that it probably won't just be "powered by Hulu", and is likely yet another case where we'll see bugs and UX papercuts that the industry as a whole could have worked to fix together instead of each their own.
- 40acres 8y agoA lot of observers, especially on HN, worry about the balkanization of video streaming content and see it as hindering Netflix's growth. In my opinion, I don't really see it. When the dust settles I think we'll see Netflix and Amazon as the duopoly of this era of video streaming. I don't think Disney's streaming service is out to compete with Netflix directly, to me it's more of a play to leverage the Disney brand and ensure they still have a 1:1 relationship with the consumer. Look at it this way, dozens of journalistic outfits have gone by the wayside in the era of Facebook and Google, but the New York Times and Wall Street Journal are not trying to compete by being aggregator platforms like Facebook and Google, instead they are leveraging and monetizing their goodwill and reputation by putting up paywalls, I see Disney doing the same for their content. Also, Disney (smartly) is going to hedge their bets and continue to put new original content on ABC, ABC Family, movie chains, etc. They are not playing the same game as Netflix. The same can be said for Hulu, yes Hulu has more original content -- but at the end of the day Hulu is mainly a channel for the traditional networks to get their hit shows on a streaming platform ASAP from original air date. As long as Netflix keeps their debt under control, they will continue to grow and have a lot of room to keep raising their prices. Netflix is still drastically cheaper than the cheapest cable bundle, even if you combined a Netflix subscription with Amazon, HBO, Hulu, etc.
- p33p 8y agoBen and James talk about this on their podcast. I'd recommend giving it a listen to see them extrapolate on your thoughts.
- airstrike 8y agoFWIW, Netflix will no longer be able to license Daredevil shows from Marvel / Disney. I think a lot of folks signed up for Netflix to watch that catalog of films and shows specifically, including the latest Avengers and whatnot. I think the more likely scenario is Hulu goes away and we're left with Amazon, Disney/ESPN and Netflix. And HBO, of course.
- cpsempek 8y agoDisney has a large stake in Hulu, due in part to the Fox acquisition. Moreover, Disney+ will focus on kids and family content, they will need Hulu to provide the network TV along with more adult focused content. Per Disney's own admission, Hulu will partner with their streaming service and will likely not go away anytime soon.
- jVinc 8y agoMy takeaway from Birdbox is the old adage: "Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes." Sure it got tons of views because of all the advertisement and the tons of focus on viral media advertisement on every single platform. But the reaction from people watching it before me when asked if it was good was "Well I mean, I did watch it to the end, but i wouldn't call it good". Personally I didn't care for it. It was a huge and expensive stunt by Netflix to show that they could game viewer numbers for a one-shot thing. And I get that this is an important thing for them to do, but it's in no way sustainable or valuable either to them or their viewers. If they did more stunts like bird-box throughout the year, most would quickly start to completely ignore them with an attitude of "Oh sure I head about X, and it's "blowing up on facebook" but that's always the case with Netflix focus pieces, they aren't worth watching though."
- x3tm 8y agoFew people complain about google's curated search results though or facebook news recommendations (or whatever they are called, I dont have facebook I just read about their algorithm some time ago). edit: typo.
- misterprime 8y agoFor me it was: "Cool, this is some decent new content from something I was already paying for." Perhaps if I wasn't already a subscriber and the social media hype led me to subscribe I would be disappointed, but for an existing subscriber? I'll keep my auto-renew going.
- bilbo0s 8y agoThis is so true it hurts. It's like you're a mirror of myself: Price going up? mmm... I don't know if I want to pay that... Wait... What? Decent new content? Well, guess I won't unsubscribe. Still cheaper than cable!!!
- AdrianB1 8y agoFor me, it was the time to ask myself seriously if I should cancel the subscription. The "decent new content" is subjectively mediocre and most of what I see in the catalog is mediocre or worse. I have just 3 TV series I enjoyed in the past year, 2 are British weird stuff and one is Altered Carbon, all were ok, nothing great.
- doe88 8y agoI would only speak anecdotally and from what I've observed from people I know. Thus I don't try to infer anything at all, but at least locally I've found it remarkable: in a couple of years, Netflix has become synonym of streaming in their mind, it has really become a thing. They are watching Netflix movies and series a lot, mainly because there are on Netflix, good or bad, indiscriminately, and even more surprisingly, they are discussing about them. It seems to me some people really like Netflix, the service, like some people like Amazon Prime, the service. Netflix seems to have succeeded in building a relationship with them.
- 2bitencryption 8y agoMy takeaway from Bird Box is that if Netflix wants to make any of their original content one of the most-watched media events of the year, they can do it, regardless of the quality of the content itself. All it takes is for them to slip it in to people's "custom, curated" lists at a higher frequency, and maybe do a little subtle social-media engineering on Reddit/Facebook, and bam: instant box office smash of a derivative film with a 66% on Rotten Tomatoes. That's a huge "flex". Big studios could pump hundreds of millions into a decent film and still have it flop. Netflix can take a B-movie and make it a sensation with relative ease. No wonder every game in town is trying to break into this model. Why invest millions on a potential flop when you can engineer one with 75% accuracy whenever you wish? (though maybe I'm being just a bit too paranoid here. I have to admit some of the Bird Box magic stems from its intriguing concept. guerilla marketing doesn't work so well if what you're selling doesn't seem too interesting) edit: people are debating the idea of "box office smash" here. I didn't use that phrase to emphasize direct earnings as a result of the film (which is "free" to watch if you pay for a subscription). The article addresses this: > Secondly, and relatedly, Netflix is counting on subscription revenue. To that end, producing a piece of content that 58% of its subscriber base viewed in a single month is by definition a triumph (and yes, worth ~$700 million). The idea is that Netflix was able to coerce more than half of its subscribers to watch this film. That's crazy. The result, as we see in the article, is a tidal-wave of Bird Box achieving near-meme status. How does that feel to someone who does not have a Netflix subscription? What big joke/story are they missing out on? For only $14.99 a month, they can win social acceptance by being "in the know" of the current big thing.
- baxtr 8y agoYes, I agree, but you can’t do that too often. People will eventually stop trusting your recommendations. I experienced something similar with their B-series that they highly promote. I stopped after watching 1-2 episodes. Now, I don’t even care to start anymore.
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- shmerl 8y agoNetflix gradually turned from bad to worse. First they pushed DRM into HTML standard. Then they joined the MPAA cartel. Nothing good should be expected on that trajectory.
- beerlord 8y ago0.01% of customers care about that and less than 1% could even decipher those acronyms.
- ajcodez 8y agoNetflix should create less content, not more. I find it low quality and will discount titles with Netflix logo that otherwise look interesting. I’m also a Mubi and Amazon Prime subscriber. It’s surprising to hear the original content is working for the company.
- monetus 8y agoI don't see how they could pursue anything but that considering how they probably won't be able to license the shows of other streaming services.
- thirdsun 8y agoI love Mubi for their taste and community of cineasts. However that 30 films a month model makes it a non-starter to me - the selection is just to limited. I feel somewhat guilty but I basically use them as a giant movie database with excellent curation and lists for free.
- dasil003 8y agoHaving dedicated nearly a decade of my life to a startup competing in this space, the OA is right about Netflix's superior strategy when it comes to user experience and content production. Netflix surged ahead of the pack because they focused relentlessly on the quality of the streaming experience while all the legacy players were focused on deal-making. In other words, while Netflix was building a solid video delivery platform, the rest of the industry was fumbling around with biz dev deals like TV Everywhere that have a very low UX ceiling in the best-case scenario. However that's the past now, and the OA is missing a few trends: First, Netflix will not maintain its UX lead at the same level for long. Video streaming like all technology is commoditizing, the experience will get better and better from non-tech companies. Meanwhile Netflix is continuing to plow down this path of algorithm-driven engagement and ramming stuff down people's throats with auto-play, bad search, and other dark patterns. Given the current cultural zeitgeist (eg. Facebook backlash), this isn't going to end well if they don't change course. Perhaps even more important is the fact that Netflix has a long way to go on the production side. There's a lot of volume of Netflix productions, but not a lot of quality. This is where the OA underestimates Disney—their content is way broader and better than Netflix, and people care a lot about that. Netflix's experimental Interactive content and Reed Hasting's comments about Fortnite also give me pause. This is typical SV-style next-big-thing thinking, but it also represents taking the eye off the ball. Video games are video games, Netflix doesn't know shit about them, and if you ask me they are better off focusing on their core competency versus trying to build a moat with a gimmicky concept. 5 years ago I would have said Netflix has a better chance at becoming a great producer than Disney has at creating a great streaming experience, but now I'm not so sure.
- erikbe 8y agoI find this to be off-base in a number of ways, starting with the premise that Netflix is a two-sided platform like Facebook, Google and Amazon. Netflix used to be a distributor. It paid content owners to license its back catalog which no longer had any value in primary channels, namely cinemas. It then charged users for access. In contrast, two-sided Facebook's user do not pay anything, but the advertisers pay for access to them. The relationship is roughly the reverse. Netflix also do not have suppliers that build up the attractiveness of the platform to end users. Netflix paid for back catalogs. Amazon doesn't pay its merchants. Today, Netflix is both a distributor and a producer. This doesn't make Netflix twice as strong but introduces a number of dilemmas into the organization. In the same way that Disney would look to external distribution channels to maximize the return on its investment in content, Netflix now has the same incentives. Netflix has no suppliers in the sense of Amazon - it pays for all the productions on its platform. It supplies itself. In fact, they could theoretically make more by having staggered releases where premium channels like cinema receives new titles first. Why? First, because a single ticket to the cinema costs more than a month's subscription to Netflix. Second, because the direct income from Bird Box is $0. Certainly Bird Box has a positive effect on subscriptions but it can only be inferred. This is an enormous problem. How can you justify spending say $100 on a production which could directly generate $700M at the box office, and then just release it to a limited audience? There are going to be numerous internal battles over this. I bet we'll see Netflix go for wide cinematic release of some titles. Another issue is capital. Not only does Netflix has to produce content from which there is no direct return. They also have to market it. A $100M production may receive half or the same amount of spend on marketing. They have to build IP that is as relevant as Marvel. In summary, the challenges Netflix has is contradictory incentives between distribution and production, mastering the art of production and building of IP, and spending on marketing new productions.
- happybuy 8y agoAll the signs indicate that Netflix has become a user hostile company that is prioritising ongoing user engagement and stickiness over their users needs. It's starting to remind me of another company which at one point in their evolution prioritised user engagement over everything else – Facebook. Once this occurs, it is a long slippery slope which leads to a series of user hostile internal decisions which ultimately leads to the user and their privacy becoming the product. When you actually pay for Netflix and this is their modus operandi it leaves a large opening for a competitor with a more user-focused approach to come in and gain marketshare. A few examples of how Netflix is prioritising engagement over their users: - Auto-playing shows once a show has finished (this leads lazy users unnecessarily watching more Netflix) - Promoting Netflix shows above third party content, irrespective of quality. This prioritises what's best for Netflix instead of promoting the best content for the user. - Algorithmically modifying the poster frames / thumbnails of shows to be more appealing to users. Again promoting engagement and misleading users of the true content of the show. - Removing the ability to easily see the complete catalogue via comprehensive categories, which enhances the reliance users have on algorithmic suggestions I'm sure all of this has been tested in Netflix and they can show that these approaches increase stickiness and engagement. Stickiness and engagement is not what is in the users best interest however and over the medium and long term I think it will be detrimental to a better measurement which is user satisfaction.
- SturgeonsLaw 8y ago> Removing the ability to easily see the complete catalogue via comprehensive categories, which enhances the reliance users have on algorithmic suggestions To me, this one seems counterproductive to both Netflix's and the consumer's shared goal of engaging in interesting, new content. I've had occasions where I've signed in to my "guest" profile and seen media that never appeared at all under my main profile, and have enjoyed watching it, where at the same time my main profile has felt a bit stale. Netflix might have confidence in their all seeing all knowing algorithm, but with myself as a single data point, it has sometimes failed to suggest things that I've found interesting.
- kazagistar 8y ago
- LandR 8y agoI actually really enjoyed Bird Box. It's the closest thing we've got to a Lovecraft horror film.
- notalwayshuman 8y agoofftopic, are the diagrams made in photoshop or something more approachable?