Content of the material
Netflix’s View: streaming entertainment is replacing linear TV
People love movies and TV shows, but they don’t love the linear TV experience, where channels present programs only at particular times on non-portable screens with complicated remote controls. Now streaming entertainment – which is on-demand, personalized, and available on any screen – is replacing linear TV.
Changes of this magnitude are rare. Radio was the dominant home entertainment media for nearly 50 years until linear TV took over in the 1950’s and 1960’s. Linear video in the home was a huge advance over radio, and very large firms emerged to meet consumer desires over the last 60 years. The new era of streaming entertainment, which began in the mid-2000’s, is likely to be very big and enduring also, given the flexibility and ubiquity of the internet around the world. We hope to continue being one of the leading firms of the streaming entertainment era.
Streaming Entertainment Apps
The world’s leading linear TV networks now offer their programming on-demand through apps that run on phones and smart TVs. These apps, such as Disney+, HBO Max, Paramount+, and BBC iPlayer enable binge viewing and catch-up viewing. Existing linear networks that offer compelling internet apps will generate more viewing and become more valuable. Those networks that fail to develop first-class apps will lose viewing and revenue.
Streaming entertainment is expanding rapidly because of:
- Ecosystem Growth: The internet is getting faster and more reliable, while penetration of connected devices, like smart TVs and smart phones is also rising
- Freedom and Flexibility: Consumers can watch content on demand, on any screen, and the experience is personalized to individual tastes
- Rapid Innovation: streaming entertainment apps have frequent improvement updates and streaming is the primary source of UHD 4K video content.
Eventually, as linear TV viewing falls in viewing and value, the spectrum it now uses on cable, fiber, and over-the-air will be reallocated to expand internet data transmission. Satellite TV subscribers will be fewer and more rural. In a few decades, linear TV will be the fixed-line telephone: no longer mainstream.
DVD and Blu-ray
Netflix has remained true to its roots, continuing to run its DVD-by-mail rental service, which preceded the arrival of its streaming platform in 2010 and the meteoric rise of smart TVs and various Roku devices. The only difference these days is you won’t find DVD and Blu-ray options on Netflix’s site. Instead, disc plans have been relegated to DVD.com — a Netflix-owned company that deals with all things DVD and Blu-ray.
The Standard Netflix subscription tier is priced at $10 per month for access to an unlimited amount of DVDs and Blu-rays, with rentals limited to just one disc at a time.
However, customers looking to have an exciting night in front of the TV can upgrade to Premier, which costs $15 per month for the option to borrow up to two discs at once.
|Plan||Price||Discs per month||Number of discs out at once|
ISP MVPD relationships
ISP subscribers pay for internet access and expect to be able to enjoy streaming entertainment such as Netflix. Our Open Connect program supports hundreds of large and small ISPs to directly interconnect with the Netflix network for free in regional locations, rather than going through third-party transit providers, which lowers both our costs and that of the ISPs.
Sometimes, large ISPs want to use their market power to extract interconnect fees from us and others. We fight for free interconnection, where neither side charges the other, as we think Netflix and consumers are best served by strong network neutrality. We have made good progress in these battles, and they are usually country and ISP specific. We don’t intend to try to collect a percentage of broadband revenue from ISPs, despite the fact that we are a substantial portion of what consumers do with their internet connection, and that this payment would parallel the payments to basic cable networks. Strong net neutrality, where payments are neutral between ISPs and content providers, is better for supporting amazing innovation for consumer benefit.
With MVPDs that have an internet-capable TV set top device, such as DISH and Comcast (USA), Virgin (UK), Telus (Canada), Orange and Free (France), Liberty Global and Sky (across Europe) and many others, we offer integrated viewing experiences (and in many cases integrated billing) which increase the use of the operator set top device. Most MVPDs prefer that our growth happen through their remote control and set top experience.
Why Grandfather Pricing Isn’t Helping
Grandfathering kneecaps the expansion revenueyou desperately need to grow and crushes your relationships with your customers. It remains one of the most pervasive yet least effective practices in today’s subscription economy.We’ll take a look at the ways grandfathering hurts your business, dispatch the three common excuses used to justify the practice, and share the best way to raise prices on your grandfathered customers without making them walk away. Let’s jump right in.
How Grandfathering Hurts Your Customer Relationships
If there’s one foundational principle behind everything we talk about on this blog, it’s this: your price is the exchange rate on the value you’ve created. When you sell your product for the price your customers are willing to pay, you’re making a deal that benefits both of you. Grandfathering dramatically tips the scale in the direction of your customer while undermining the value you’re providing.
This comes at a serious cost not only to your bottom line but to the way your customers perceive your product. If your customers start receiving additional features without paying for them, you’re actively devaluing your product in their eyes. When we combed through our data on thousands of subscription companies, we noticed a fascinating trend: grandfathered customers are actually more likely to churn than those on regular plans. This might seem counterintuitive, but it makes perfect sense. The more you charge, the more likely your customers are to stay engaged with your product. Your best customers are those who eagerly pay each month for the additional value you’re adding, not those who coast along at a grandfathered rate. Obviously, there’s a limit here – charging far above market rates for an inferior product won’t get you very far. But, if you’ve dialed in your pricing, you’re better off charging a fair rate than a grandfathered one. You don’t take your customers for granted. Don’t let them to do the same to your product. Of course, it’s easy to agree to this in principle. We all know that the specter of raising prices is enough to send some founders running . Let’s walk through the reasons why the major excuses founders and executives use to justify grandfathering just don’t cut it.
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A class action lawsuit alleges that Netflix Inc. broke the contract it made with millions of customers who have “grandfathered” subscription plans with price guarantees. According to the Netflix… Read More
How to save money on a Netflix subscription
There are a number of ways to save some dough when it comes to enrolling in Netflix. As previously mentioned, one of the most common options is sharing the cost of a Netflix account with friends and family. In this case, you’ll probably want to opt for the Premium streaming plan ($20), which unlocks 4K streaming and allows Netflix to be viewed on four screens at once.
Another way to net the service for a reduced cost (or for free in some cases) is to be on the lookout for Netflix bundles from internet service providers, TV/smart device companies, and cell phone providers. For instance, T-Mobile subscribers can get a number of Netflix perks via the company’s Netflix on Us offer.
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