Disney+ or HBO Max may have raised prices, and it’s Netflix’s fault

Netflix had the worst week it can remember in a long time. It is possible that for economic purposes the worst in its history. Its shares are down 36% this week after announcing that it lost 200,000 subscribers in the first quarter of the year. His first fall in over 10 years.

While this is a major turning point, it’s also worth noting that all of this week’s headlines and market reactions seem to have gone one step further than they really are. Netflix has already lost users in its most popular areas. – The United States and Canada – and it’s been a few months when only the opening of new markets continued to fuel his expansive model. In other words, it had to happen. Which does not prevent, on the other hand, the fact that for the first time we clearly see that the flowing cake is starting to run out of pieces that could be cut.

The reasons are many and varied: a relic of exceptional growth during the pandemic, the arrival and consolidation of multiple competitors, increasingly predictable Netflix content… Or, simply, its consolidation as the most famous “channel” of the streaming era.. The problem, for the most part, is that the Netflix model is based on constant growth. And this is where we all as consumers can see that in the long run we will have to scratch our pockets more.

Netflix has announced two plans to fix this hole: exploring a plan with ads – something that has been sworn unthinkable in the home of the red giant for years – and, after many threats, the final launch of what we can call the general account apocalypse In practice: what the sharing model that, whether you like it or not, helped make OTT platforms so pervasivecomes to an end, giving rise to a much more restrictive and therefore more expensive model that kind of feels like a throwback to the era of cable television.

So much streaming to go back to cable

Netflix has been raising prices across the board in recent months to keep growing and pouring gasoline on the fire of original content, which in a way forced it to create the emergence of other platforms (Disney Plus, HBO Max) that claimed them. production, which had their own brands.

Now, a plan that seems to be under way so that we don’t share accounts with anyone outside of our home (and it looks like IP dialing will be supported along with dual authentication so it won’t be crap when traveling or mobile browsing) that would make it even more expensive. But the worry is that if his system catches on, all the streaming platforms will continue to use it, which have always come in with a lower price that has risen as they have become “common”. Paying one euro more per month for Disney Plus? Why not, until people make the bills.

In the United States, where cable has had far greater penetration for decades than in other countries like Europe, they’ve already done the math. In the mid-2000s, the average cable TV package cost $69 a month.. Now to have the most famous platforms, over 80. And that’s without inflation.

How much will it cost to subscribe with these new Netflix account sharing rules? It looks like the model will be based around allowing account sharing, but with the addition of what will become “child accounts”. In this way, you can avoid that many customers will cease to be customers. Let’s imagine a family that has a joint account is not the same as collecting 1 or 2 euros/dollars more per month than paying for a new account.

Netflix has already tested this system in Costa Rica, Chile and Peru for a price change for each “Additional Member” in the range of 2 to 3 EUR/USD per month. Too little to unsubscribe for many, but enough for another sneaky price hike. These subscriptions allow two people to access an existing Netflix account with their own logins and profiles. The company also offers a profile migration tool for those who share a password and decide to pay for their own accounts.

What if all series and movie platforms follow this path?

This is not a question for Netflix, but for its competitors. In general, the streaming industry has resisted direct attacks on password sharing for a long time due to the many potential problems associated with it. Netflix itself seemed pleased that password sharing was a reality in the streaming business.. In fact, as we already mentioned, it was one of the distinguishing points compared to paying for cable TV, and even more so “distributable”.

But if Netflix can show revenue growth through a tougher stance on password sharing, other streaming services like Disney Plus or HBO Max, Apple TV+, Prime Video, or whatever, could follow. Eventually, they may face the same market saturation problems. and the subscriber growth that Netflix is ​​currently facing.

The only thing we know for sure about Netflix’s password swap measures is that the streaming world will be watching the results closely.

Streaming eats everything to keep growing (and taking more)

Despite all the hype about streaming, the backstory is pretty simple. Netflix needs to give potential customers a reason to sign up and existing customers a reason to stay.

Netflix has already started experimenting with both ways. It expanded into unscripted television, original films, animation and material in foreign languages. He financed his growing programming budget by raising prices, which generated more revenue per client.

While both strategies have worked well for many years, they are no longer sufficient. There aren’t many new genres of programming other than sports and news that Netflix has abandoned. And Netflix can’t raise prices forever. Service abandonment rates are on the rise.

The next frontier seemed to be video games.but this, if it actually happens, looks like a long-term battle for Netflix.

But, At what point will not only Netflix, but the prices of OTT platforms in general, hit the ceiling?

So far, it seems that the high point has not yet been reached, although the increases that we will see in the coming years will already hit the main and intermediate plans.

But maybe Netflix isn’t so bad after all.

The key to raising prices without significant spikes in cancellations or dissatisfaction is to reassure customers that they are still getting good value for it and their number of titles is growing as well as being included in customers as a service, much the same. basic like internet access.

Also, now that Netflix seems to be having a hard time, it should be remembered that it has only been creating original content for 9 years. In contrast, he has universes like those Disney, Marvel or Warner in front of him with stories of decades behind him. And despite this, some stories like weird things It’s kind of like a franchise. In general, the content is not so bad.

“The goal is to become HBO faster than HBO can become us”This was stated by current co-CEO of Netflix Ted Sarandos in an interview with GQ back in 2013.

But in reality, Netflix is ​​aiming to replace not only HBO (the longtime reference cable TV in the US), but also many of its competitors. Netflix focused on a broad offeringwhich includes animated children’s programs, reality shows and game shows in addition to series and movies.

In a word, all-in-one, from which it is becoming easier for the consumer not to leave. Who knows, maybe in a few years, to sum it up, Netflix will take the leap to having its own news program as a news release to become “TV” entirely.