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They were touting in their new quartely results that they didn't think they were seeing any lasting consequential negative effects from raising the price again.

They were touting in their new quartely results that they didn't think they were seeing any lasting consequential negative effects from raising the price again. Which is another way of saying to Wall Street that investors can count on Netflix to hit subscribers in the US again in the next year or two. Negative $380 million in cash flow in the quarter (vs negative $287m last year), persistently worsening quarter after quarter, year after year. I can't decide who has the worse business model, Netflix or Uber. Their entire business hinges on the ability to hit US consumers with ever higher fees for ever less content. Either $14 or $15 is where I unsubscribe permanently from Netflix, unless they want to give me a much larger traditional movie library to go with the perma hikes.

JakeTheAndroid 8y ago
What's sad is I happily pay for HBO Now at a $15 price tag, but Netflix wanting 13 pissed me off. And I am absolutely on Netflix more often, because I use it to keep shows running in the background (no other service does this as well as Netflix). With HBO though, they have amazing content and a lot of it. And they own most of it, and rotate out solid movies that I probably wouldn't buy or rent myself.
- scruple 8y ago
  I spend more time browsing the Netflix catalog than I do watching television, it feels like. I cancelled in the past but we recently re-subscribed and I'm regretting it.
autokad 8y ago
in fairness, when netflix spends money on developing new content, they are building up a library. viewers in the future viewing that content will be very high margin. Thats sort of a huge advantage for one of the long time content producers. say DIS spends 10 bil on original content and netflix matches, DIS has decades of previous content already built up.
- adventured 8y ago
  I understand, however they can never stop that cycle of building the library. Content ages, plenty of it isn't very good or won't appeal to a wide audience, and people might watch it once if you're lucky. After that watch, you then have to feed them the next thing and the next thing, forever. Disney generates $14.8 billion in operating income and has a real, sustainable profit. Netflix is actually losing vast, ever larger amounts of money, despite being at around 150 million paid subscribers. Which is a pretty blatant admission that they can never generate a profit with the current approach. And that's before the competition heats up a lot further with Apple and Disney, both of which have far deeper pockets. Amazon ($40b in cash) also now has far deeper pockets, thanks to their AWS & ad profit machines. Perhaps the most interesting figure for Netflix is the quarterly interest cost. $132m in debt interest cost for all of 2015. $128m in interest cost just for 4Q18 alone. Soon their interest costs might match the size of their 'profits' at the rate they're going on debt accumulation (and assuming likely slower growth with their scale). They're looking at eventual debt downgrades and higher interest costs if they can't stop the worsening negative cash flow. The debt markets will get more skeptical. Long-term debt was $3.3 billion at the end of 2016. A mere two fiscal years later it was up to $10.3 billion. For a company their size that's an enormous jump. Given they've largely saturated the richer markets and the only thing they have left are fee hikes to try to improve margins, I fail to see how they can turn the corner given their financial metrics keep getting worse as they get larger. What new markets could they add that would spur some great positive cash flow turn? I suspect they're nearing the limits of price increases in the US, to make matters worse. They've placed a bet on some magic corner-turning event based on scale, meanwhile two ferocious competitors with unlimited capital have just entered the race.
  - autokad 8y ago
    thats why I double downed on my DIS and do not own NFLX; though I wouldn't call someone a fool for owning NFLX. I actually think both have room to grow, just that DIS @ 110$ seemed like a catch
    - adventured 8y ago

JakeTheAndroid 8y ago

What's sad is I happily pay for HBO Now at a $15 price tag, but Netflix wanting 13 pissed me off. And I am absolutely on Netflix more often, because I use it to keep shows running in the background (no other service does this as well as Netflix). With HBO though, they have amazing content and a lot of it. And they own most of it, and rotate out solid movies that I probably wouldn't buy or rent myself.

scruple 8y ago
I spend more time browsing the Netflix catalog than I do watching television, it feels like. I cancelled in the past but we recently re-subscribed and I'm regretting it.

autokad 8y ago

in fairness, when netflix spends money on developing new content, they are building up a library. viewers in the future viewing that content will be very high margin. Thats sort of a huge advantage for one of the long time content producers. say DIS spends 10 bil on original content and netflix matches, DIS has decades of previous content already built up.

adventured 8y ago
I understand, however they can never stop that cycle of building the library. Content ages, plenty of it isn't very good or won't appeal to a wide audience, and people might watch it once if you're lucky. After that watch, you then have to feed them the next thing and the next thing, forever. Disney generates $14.8 billion in operating income and has a real, sustainable profit. Netflix is actually losing vast, ever larger amounts of money, despite being at around 150 million paid subscribers. Which is a pretty blatant admission that they can never generate a profit with the current approach. And that's before the competition heats up a lot further with Apple and Disney, both of which have far deeper pockets. Amazon ($40b in cash) also now has far deeper pockets, thanks to their AWS & ad profit machines. Perhaps the most interesting figure for Netflix is the quarterly interest cost. $132m in debt interest cost for all of 2015. $128m in interest cost just for 4Q18 alone. Soon their interest costs might match the size of their 'profits' at the rate they're going on debt accumulation (and assuming likely slower growth with their scale). They're looking at eventual debt downgrades and higher interest costs if they can't stop the worsening negative cash flow. The debt markets will get more skeptical. Long-term debt was $3.3 billion at the end of 2016. A mere two fiscal years later it was up to $10.3 billion. For a company their size that's an enormous jump. Given they've largely saturated the richer markets and the only thing they have left are fee hikes to try to improve margins, I fail to see how they can turn the corner given their financial metrics keep getting worse as they get larger. What new markets could they add that would spur some great positive cash flow turn? I suspect they're nearing the limits of price increases in the US, to make matters worse. They've placed a bet on some magic corner-turning event based on scale, meanwhile two ferocious competitors with unlimited capital have just entered the race.
- autokad 8y ago
  thats why I double downed on my DIS and do not own NFLX; though I wouldn't call someone a fool for owning NFLX. I actually think both have room to grow, just that DIS @ 110$ seemed like a catch
  - adventured 8y ago