It certainly has domestically. And you can't blame Netflix for this. It's merely a function of the subscription model. As Greenberg points out, that presents quite a conundrum for a growth company.
He doesn't mention the one thing Netflix is banking on to drive subscriber growth -- international. I don't blame him. It's just not going to happen in any part of the world at the level Netflix needs.
So, what's the solution? In theory, it's simple: Netflix Should Raise Prices Again.
In practice, that's not as easy as it sounds given the way Reed Hastings (mis)handled last year's increase. That's one of the reasons why I argue that Netflix Needs a Celebrity Spokesperson. Somebody to massage the public into going along quietly with a significant price hike.As I explain in the above-linked articles, there's no reason, other than blowback from last year's controversy, why Netflix should not be able to raise prices. It offers a service that is worth way more than $8 a month. Cable, satellite, SiriusXM (SIRI) -- they all do it. Some pull the move off without a hitch (SIRI), while others (cable, satellite) get away with price hikes at the same time as customers spew vitriol their way. I can't see a way forward for Netflix other than a price hike, hopping into the crowded advertising space (they would blow it) or opening its platform up in two ways -- increasing content delivery methods and working in relevant e-commerce components. In the past, I recommended the company get into the adult streaming market by taking out privately-held AdultDVDEmpire, but that's not happening. So then, Netflix needs a cash cow. DVD once served that purpose, but Hastings blew the business up. He also says he will not offer on-demand, al a carte options because that's never been what Netflix is about. I assume he's against advertising and e-commerce for similar reasons. Hastings has a model in his head -- Netflix Streaming at $8 a month across the globe -- and he's stubbornly sticking to it. Not a good idea.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV