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Juan Cena

DANG!

Postby Juan Cena » Thu Mar 12, 2015 12:07 pm

Rob Thompson wrote:And Netflix seems to be more profitable than ever.


I'd credit some of that into Netflix's move into original content like House of Cards.

Rob Thompson

Humuhumunukunukuapuaa

Postby Rob Thompson » Thu Mar 12, 2015 12:23 pm

Juan Cena wrote:
I'd credit some of that into Netflix's move into original content like House of Cards.

Possibly. Fact remains they have raised their prices and it has not hurt them.
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Wally Brando

Rain Partier

Postby Wally Brando » Thu Mar 12, 2015 1:07 pm

Rob Thompson wrote:Possibly. Fact remains they have raised their prices and it has not hurt them.

Netflix tacked on about 3 million new users across the globe over the past three months, undershooting its forecast of 3.7 million. But perhaps more worrisome, it’s growth in the U.S. fell year over year, reaching just 1 million net new sign-ups, down from 1.3 million in the third quarter of 2013. The company is blaming its $1 price hike in May, which raised the cost of a subscription to $8.99 per month. “As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago," management said in its letter to shareholders. "Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the US.”

"Slightly less growth" is a bit of an understatement. The slowdown suggests that streaming customers might be more cost-conscious than it previously seemed. When prices first went up in the spring, subscription growth didn't seem to take a hit. But now, the company thinks that may have been due to "the large positive reception to Season Two of Orange Is the New Black."

Rob Thompson

Humuhumunukunukuapuaa

Postby Rob Thompson » Thu Mar 12, 2015 3:21 pm

Chris wrote:

So -- they continue to grow?
User avatar

Chessack

Great Scott!!!

Postby Chessack » Thu Mar 12, 2015 5:18 pm

“As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago," management said in its letter to shareholders. "Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the US.”


I am shocked... shocked that higher prices led to slower growth.

There is a principle in business. I can't remember what it is called (not my field). But the basic premise is that there is a certain perceived value of something. As long as you are below that value, you can charge what you want, and increases in price that are still below that value, cause very little effect on sales. But if you go OVER that value, so that you are charging more than people think the item is worth paying for, sales will drop.

This is why you see companies raising and raising rates little by little. If the market keeps buying, they start thinking "we can just keep raising them." Then they hit a price-point that doesn't work and suddenly are surprised when they start losing sales.

I keep waiting for that to happen to DC and Marvel but there seems to be no limit to how high they can jack the prices. It's like the market is in bizarro world, where higher prices lead to HIGHER sales... apparently indefinitely. I will never understand it.

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