Netflix is the world’s largest video streaming service, and it’s not just another subscription service. Netflix’s plans are simple. For $6/month you can stream a 30-day stream of movies, TV shows, and TV series, and $12/month you can stream a 30-day stream of older movies or TV series. What’s the point of using a different price plan for a 30-day stream of older movies and series when Netflix makes much more money from this type of stream by charging their own $12 price plan? In this interview, Jeff Bezos talks about Netflix pricing and what it means for the industry.
A year ago I was working in a small, startup-ish media company, and the one customer I saw in a media meeting that day was my boss’s mother. I thought, “Wow, this is different than the big companies I know. ” My boss’s mother was always nice to everyone, never raised eyebrows, and rarely raised hands. Her face was almost always peaceful and smiling, and she always seemed like she was holding a sign that said, “I know what I want, and you have to help me. ” But I was still learning about how media companies actually make money, and how Netflix makes money. I was also learning about how some of my coworkers were making thousands a year, which wasn’t a real option. Amazon, Hulu, and Netflix pay, or are even working with, these companies that are huge, but they have to negotiate a rate, and there aren’t that many of them.
But when I started this job, I didn’t want to leave this small company for a big company. I wanted to figure out what this pricing structure was all about. Netflix is going to change the way you make money in the media industry. When you have a lot of competitors and you are pricing them separately, you are not going to have that ability to really negotiate the best deal with these competitors.
Let’s talk about the $6 plan. At $6/month, I can stream for 30 days of content. This is a pretty typical number that people in the media industry use.
The price of Netflix stock fell in the first four months of 2011.
Article Title: The price of Netflix stock fell in the first four months of 2011 | Programming.
Introduction (1) – In the first quarter of 2011, the price of Netflix stock declined 6. 4% and a sharp drop was evident from mid April until mid-July when the stock reached a low of $8. This is significant because when the stock price reaches it’s lowest, the stock price drops by 3. 5% (see Figure 1). The chart shows that the price drop was sharp and it’s quite possible that this will continue into the second quarter (see Figure 2). The second quarter will certainly not be very good for Netflix (see Figure 3) due to the anticipated increase of the number of subscribers (see Figure 4) and also the fact that the stock is already worth less than it’s book value as it’s based on the assumption that the stock will grow more than book value.
Figure 1 – The price of Netflix stock.
Figure 2 – The price of Netflix stock vs the number of subscribers.
Figure 3 – The price of the stock vs the book value.
Figure 4 – The book value of the stock vs the number of subscribers.
In order to determine the direction and magnitude of the first-quarter drop or rise in the stock price, you need to know what stocks currently traded at the lowest or highest prices. The Dow Jones Industrial Average (DIA) has the lowest closing price on the 30 stocks traded in the DIA. You can view the closing or “close price” for each stock on the DIA index website here. However, the DIA does not include the stocks not traded on the Dow Jones Industrial Average that are on the New York Stock Exchange. For purposes of determining a stock’s current closing price, you need to consider the closing price of the Dow-traded stocks. In addition, the DIA also tracks the closing price of the New York Stock Exchange (NYSE) stocks as well as the closing closing price of the S&P 500 index. The list of the DIA stocks may not be as complete as it could be. In order for a stock to move lower in the first quarter, it must have fallen below the DIA closing price.
The Netflix Price Increase Means $720 Million More Profits Than Expected
Netflix said its profit jumped 4. 6% in the second quarter — beating Wall Street’s estimate of 3. 3% — but still higher than its original estimates of a gain of 1. Netflix said net income climbed to $1. 74B in the same period last year. At the same time, Netflix said adjusted EPS for the quarter rose to $1. 86 versus estimates of $1. Analysts expected adjusted EPS of $1. 86 respectively based on average estimates. Excluding the impact of a share repurchase program, Netflix’s EPS declined 9. 2% versus consensus estimates of $1. Netflix shares closed up 1. 44 per share. Netflix’s stock traded at $115. 23 per share in its last hour of trading. In the last month, Netflix shares have dropped 2. 9% year-to-date. The stock increased 22. 9% in the month through its first day of trading.
In its press release, Netflix said its revenue for the quarter grew to $15. 08 billion, slightly lower than the $15. 10 billion in revenue in the second quarter on a revised basis. Netflix revenue this quarter grew at the same rate as in the second quarter last year, which also included holiday quarter activity.
Netflix’s adjusted revenue for the second quarter of 2010 was $12. 86 billion, $1. 86 billion, and $1. 9 billion for the second quarter of 2009. Its adjusted revenue for the first quarter of 2010 was $12.
Netflix shares have soared over the last year, rising from $65. 73 in April 2009 to over $127. 44 in the last day of trading last year. They are currently trading near that level, having hit a high of $134. 13 this month.
Netflix said its adjusted EPS for the quarter increased to $2. 81 in the year ago quarter. Excluding the impact of a share repurchase program, adjusted EPS rose to $2. 25 in the second quarter. Netflix shares have risen 3. 1% in the last month through their first day of trading. Excluding the impact of that share repurchase, Netflix shares fell 3.
What have you learned from Netflix?
This entry is about learning from Netflix.
Netflix’s new strategy is something I haven’t seen a lot of discussions about before. The company’s current streaming deal with Netflix and HD-DVD’s has not been renewed for years. To make sure its strategy is sustainable, Netflix has launched an educational initiative.
The company is trying to leverage the growing appetite of millions of people who watch a lot of TV to make sure they pay attention to the content on TV and to give their kids better viewing habits.
Giving kids more access to quality content on TV while they are young. Learning about TV content from a more interactive perspective. Giving older students access to quality content while they are watching for free.
In the past, TV networks (and now Netflix) tried to make everything they had available for free on DVD. Not only did this not work well for people who want to watch their entire TV library, but it also made it very difficult to learn about other people’s shows, movies and videos. For example, it would take time and effort to watch all the movies at different times during the year.
Netflix has taken a different approach. It created new programs and shows for its subscribers. The first such program, The Kids Zone – shows kids from 8-12 years old, as well as their teachers, about popular children’s programs: Miley Cyrus, SpongeBob SquarePants, and other programs.
Netflix is encouraging schools to give kids access to their shows, movies and other content through a program called TV Kids. This program currently includes a library of kids’ animated series and movies, as well as TV episodes, movies, music and TV shows from a variety of sources, all available for free via Netflix on the company’s streaming service. Kids can see and access these content on their own, and also with their teachers and other families.
The goal of this program is to provide this content for free for families all year long. The cost is only $1. 99 per month for basic accounts, but there are plans to offer more educational content for higher rates.
Spread the loveNetflix is the world’s largest video streaming service, and it’s not just another subscription service. Netflix’s plans are simple. For $6/month you can stream a 30-day stream of movies, TV shows, and TV series, and $12/month you can stream a 30-day stream of older movies or TV series. What’s the point of using…
